Total and Permanent Disablement
Simply put this type of insurance provides a specified lump sum if you become totally or permanently incapacitated - and therefore unable to earn your living, whether this is as a result of injury or illness.
While for most people the early death of an income-earner would cause serious financial strain for those left behind, the financial impact would be just as serious if that income-earner became totally disabled and unable to work for the rest of their life. In some cases the hardship experienced would be even more profound as ongoing daily living and medical costs for the disabled person could be significant.
What counts as Total and Permanent Disablement?
Each insurance firm has a different definition of what Total and Permanent Disablement means. The hard part is knowing whether or not you are getting a product that is suitable for you? Some companies use tests like not being able to perform two basic daily activities. Others use things such as loss of limbs.
How do you know what's best?
To make things more complicated, Total and Permanent Disablement is a product that you can purchase in conjunction with Life Assurance Cover (in the industry they call this "Accelerated Benefit) or on its own (in the industry the call this "Stand Alone Benefit").
For example.
Let's say you have $500,000 Life Insurance and $100,000 Total and Permanent Disablement (Accelerated) Insurance. If you make a Total and Permanent Disablement claim, rather than being a separate individual payment, the $100,000 will come off your Life Insurance. Therefore leaving you with $400,000 Life Insurance left.
Structuring it this way makes your premiums cheaper and is another option for people to consider.
Confused yet?
Contact an InsuranceNet Adviser for more help.