There are several options from which to choose when taking out a terminal and permanent disability insurance policy. You can either decide to take out the policy through your superannuation fund or as a standalone policy. There are also several benefits you stand to gain by taking your insurance through Colonial First State. TPD insurance can be provided to you by the insurance provider of your choice, and will be written through your Colonial First State fund. The fund will also pay for the cover.
The total and permanent disability insurance policy provides you with a lump sum payment once you are totally and permanently disabled. In order to access this benefit, you must have been away from work for a period of six months. Most people prefer to have their TPD insurance bundled with their term life insurance. If this is the case for you, it is important to note that the sum insured under your TPD cover cannot be more than the sum insured for your term life insurance policy.
Different insurance providers define TPD differently and it is therefore important for you to understand from the product disclosure statement what you are covered for under the TPD cover. There are generally two definitions that are used to show that you are totally and permanently disabled.
The own occupation definition allows you to get a benefit if you are permanently disabled and will no longer be able to carry out the duties of your usual occupation. The any occupation definition allows you to get a benefit if you are permanently disabled and unable to carry out the duties of any occupation for which you are suited either by your experience, skills or education.
Under the home duties definition, you will get a benefit if you are permanently disabled and unable to carry out your usual domestic duties and the duties of any other occupation.
Previously, the Colonial First State Super Fund only accepted policies from Asteron and Comminsure which were written within super. However, this has changed and currently, you have a choice to have your TPD insurance within super but offered by various insurance providers. These insurance companies include Clearview, AIA, Macquarie and TAL.
This process of having your TPD insurance within super but offered by other insurance providers is known as partial rollover, and enables you to get your TPD insurance at a cheaper rate. This is because when your premiums are paid, a 15 per cent tax benefit is applied, meaning your premiums are paid at a lower cost. The premiums are normally paid once a year and you can renew your Colonial First State TPD insurance policy annually.
When you decide to take the Colonial First State TPD Insurance option, it is a good idea to seek guidance from a licensed insurance broker who will assist you to fill out the medical questionnaire. He or she will also help to set up your super fund to be the means of payment. You will also be guided when filling out the form with the partial super rollover details, which ensures that your preferred insurance company is paid from your super fund. You will therefore not be required to pay by credit card or through your bank account.
Kerrie Peacock regularly analyses new trends within the Australian personal insurance market. She shares such valuable information to help Australians make informed decisions. For more information and advice, log on to www.mecovered.com.au/colonial-first-state-tpd-insurance.