August 2021
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Adding Total And Permanent Disablement Insurance to Life Insurance

With a normal life insurance plan, the cover is very straight-forward – if the insured person dies or is terminally ill, the claim will be paid by the life insurance company. This means that the insured person’s family is protected if the insured person dies or is terminally ill.

However for many people it’s also important to add cover so that there is a payment if the insured person does not die – but suffers a major health problem and cannot work. One option that is commonly added to life insurance is “trauma” insurance (which pays out a lump sum payment if the insured person experiences a “trauma” condition – certain forms of cancer or a heart attack for example). Another common type of insurance to add to life insurance is “total and permanent disablement” insurance. We’ll take a quick look at how this works.

As the name suggests, total and permanent disablement insurance is designed to pay out if the insured person is so disabled that they are never again able to work. The sum is usually paid out as a lump sum (as with life insurance you can choose the amount you are insuring at the time you take out the policy).

The exact definition of “totally and permanently disabled” can vary a lot between different insurers and policies. With some policies the definition will be based on the insured person being unable to ever again perform their usual occupation. This tends to be the best approach, and gives the client the greatest certainty. With other policies, the insurer might demand that the insured person is not only unable to perform their own occupation, but any similar occupation that they might be suited to. This definition is not as good for the client – as it could make claiming considerably harder. So, if you are considering adding total and permanent disablement insurance to your life insurance, it’s important to check which definition the plan you’re considering is using.

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