How Much TPD Insurance Do You Need?
When determining the amount of TPD insurance to establish you will need to take into account your personal situation and family needs. Think about your financial commitments (debts, mortgage repayments, rent etc), and think about a situation where you may never work again. How much TPD insurance would be required to provide financial stability?
When deciding how much TPD insurance to establish you should also take into account other factors such as income protection insurance, and if you have income protection this may enable you to reduce the amount of TPD cover that you establish.
- Situation: 45 year-old couple with two teenage kids and a $250,000 mortgage with the father earning $90,000 a year and the mother providing full-time home care. The father suffers a cycling accident and breaks his back, becoming partially disabled, and is unable to continue work in the same or similar vocation indefinitely.
- TPD Insurance pays him $500,000, allowing the family to pay off the mortgage, refit the home to allow for greater mobility, pay for a carer, and provide an initial income stream.