How would life be for you if you got sick?
Let’s take some time out from our busy lives and have a think about how life would be if, because of sickness or injury, you are unable to work in your own or any occupation for which you are suited by training, education or experience? How would you pay the mortgage? How are you going to pay for your living expenses? How are you going to pay for your car insurance premium?
Total Permanent Disability Insurance provides a lump sum Benefit Amount payable if you become Totally Permanently Disabled. It is designed to help take the pressure off you financially if you suffer an illness or injury that leaves you totally and permanently disabled. This lump sum benefit is often used to eliminate debts, pay for medical expenses or fund permanent lifestyle changes. Determining how much cover to take out requires a close assessment of your personal financial situation and how your life could be affected in the event of becoming Totally and Permanently Disabled. Without TPD insurance, you may have to possibly rely on family, friends and the health system for the remainder of your life.
People often self insure, which means that rather than buying a specific policy, they rely on their existing assets to fund their expenses and lifestyle if something were to happen. Whether this means they will sell down their assets or be able to live off the income provided by these assets. This can be an option for people who have accumulated sufficient level of wealth to cover themselves, such as those close to retirement. Unfortunately, people often choose to self insure because they believe the cost of insurance is too high. What is the real cost of your family not being unable to lead the lifestyle that you had planned due to a TPD event?
Also, default cover is not tailored to your circumstances – whether this be in your superannuation fund or not. This then results in a gap between the required cover needed and the default cover given. When it comes to death and TPD cover, research by Rice Warner actuaries illustrates that life insurance cover within super is on average only 20% of what is needed. (www.lifewise.org.au)
Have a think about this question – would you stop insuring your car insurance if you felt the premium was too high? No, I didn’t think so.