TPD Insurance – What Is It Good For?

Remember the time you dressed up as superman and jumped off the roof of the shed, thinking you could fly? Most of us can remember a time when we thought we were ten feet tall and bullet proof. Children generally develop more self-protective behaviours as they grow up, but even as adults one of these protective behaviours is pretending things ‘can’t happen to me.’ As insurers, CommInsure sees the personal and financial impact of injury and illness on individuals every day. One of the products that helps people reduce the financial impact of injury and illness is TPD insurance, or Total and Permanent Disability insurance. In this article, CommInsure’s Jeffrey Scott talks about the high costs of not insuring, and how for just the price of a cup of coffee a dayyou can get protection. 

The costs associated with a severe disability are very high. An Access Economics Report recently stated that the greatest proportion of costs for traumatic brain injury (TBI) and spinal cord injury (SCI) are borne by the individual (40% to 65%), with the State and Federal governments bearing the rest. As you can see from the chart below, the costs are substantial.

Total cost per individual during first six years of injury

Not all permanent disabilities are as severe as traumatic brain injury or spinal cord injury.  The average cost in the first year for a person who has suffered a stroke for the first time was $18,956; over a lifetime the cost was $44,428, including rehabilitation costs of $13,627. 

The average lifetime financial cost of cancer on a household in NSW is around 1.7 years of annual household income.  

In the case of multiple sclerosis, the average annual direct and indirect costs per patient were $20, 396 and $15 085, respectively. The greatest uses of resources were for drugs, consultations, and nursing care.

Could your family cope? Fortunately, you can protect yourself (and ultimately your family) with total and permanent disability insurance (TPD).  This can provide a benefit of up to $3 million. In most cases, the benefit is paid when, “ a person suffers from ill-health (whether physical or mental), and two legally qualified medical practitioners have certified that, because of the ill-health, it is unlikely that the person can ever be gainfully employed in a capacity for which he or she is reasonably qualified because of education, experience or training”.  There are also supplementary benefits for “loss of use of limbs or sight”, and “loss of independent existence”.

In a recent TPD insurance case, the individual was able to use his claim payment to change his lifestyle after a serious traffic accident. He paid off his mortgage, paid for carers, kinesiology, reflexology,  cranio-sacral, acupuncture, feldenkrais, massage therapy, recreational equipment, wheelchair, on-call nursing, hyperbaric chamber treatments, hydrotherapy, recumbent bike, commode chair, hospital style bed, and modifications to his car. He also underwent special rehabilitation where he has learned to walk again. Without the stress of worrying about finances, he has been able to recuperate at his own pace and is now planning on starting his own consulting business. 

How much does it cost?
For a $1,000,000 sum insured TPD policy (any occupation, male, aged 40,
non-smoker, accountant), it is less than $670 per year (less than $2 per day; 
or less than a cup of coffee). And just like the superman actor Christopher Reeve who suffered from TPD in real life, we can see that we are not bullet proof after all, and it could happen to you.

If you do not have any TPD cover in place, make an appointment to talk to your adviser today.


Source:
Jeffrey Scott, Executive Manager, Business Growth Services, CommInsure  
• A Guide to Australian Government Payments – 1 January 2010 to 19 March 2010.
• Access Economics - The cost of traumatic SCI and BI in Australia – June 2009
• 4102.0 Australian Social Trends 2007, Labour Force Participation - An International Comparison
• OECD 2006, 'Improving Incentives to work', Chapter 6 in Economic Survey of Australia 2006, OECD, Paris.
• Department of Employment and Workplace Relations 2006, Annual Report 2005–06, pp. 31, DEWR, Canberra.
• Guidelines for levels of attendant care for people who have spinal cord injury and can claim under the NSW Motor Accidents Scheme.  Motor Accidents Authority (MAA) March 2002Australian Bureau of Statistics 2007,  Labour Force, Australia, May 2007, cat. no. 6202.0, ABS, Canberra.
• Australian Government, Department of Human Services, Centrelink, Disability Support Pension webpage, viewed 22 November 2006, http://www.centrelink.gov.au/internet/internet.nsf/payments/disability_support.htm