How Much TPD Insurance Do You Need?
When determining how much TPD cover to get, you will need to take into account your personal situation and family needs. Think about your financial commitments, such as your debts, mortgage repayments or rent, and regular bills. If you never work again, how much would you need to cover them per month? Then think about possible future investments you may like to make, and your cost of living on top of that. The amount of TPD cover you get should take into account all of those factors.
You should also think about other sorts of coverage you have, such as income protection. If you have income protection, this may enable you to reduce the amount of TPD cover that you acquire.
- Situation: 45 year-old couple with two teenage kids and a $250,000 mortgage. The mother earns $150,000 a year as an actor, while the father is pursuing full-time study. The mother suffers a cycling accident and loses function in one of her legs, becoming partially disabled. She can no longer work in the entertainment industry, but a former employer has offered a low-paying job as a receptionist at his company.
- Any Occupation TPD Insurance: There would not be any payout under this definition, as the mother is still able to work in some form.
- Own Occupation TPD Insurance: The family would receive the $500,000 cover they acquired earlier, allowing them to pay off the mortgage, refit the home to allow for greater mobility, pay for regular medical checkups, and provide an initial income stream. This sum will be paid out regardless of whether the mother takes the job as a receptionist.