TPD Cover for Tradesmen
If you could no longer work due to a serious illness or injury, how would you support your family?
For many tradesmen the answer would be Centrelink benefits, but is that really what you want for your family?
TPD insurance is one of the best ways for a tradesman to protect themself and their family against the financial impacts of suffering an injury or illness serious enough to keep them from working for the rest of their life.
TPD stands for total and permanent disability, and that’s exactly what the insurance covers. If a doctor indicates that you are totally and permanently disabled, and that you are unlikely to ever return to work, your insurance company will pay out your full TPD benefit amount.
How much TPD insurance does a tradesman need?
How much TPD insurance you need really depends on your own unique set of circumstances.
A single tradie with no debts may simply need a basic policy that will give them a lump sum sufficient to cover any costs associated with the condition. Many TPD claims involve paraplegia or quadriplegia, which may require expensive home and car modifications to suit your new life with a wheelchair.
A tradie with a family and a mortgage will need the same amount as a single tradie to cover possible lifestyle changes, but they will also need enough to get rid of their mortgage and other debts, and enough of a buffer to ensure their family is looked after.
Regardless of your situation, if you do not have an income protection policy that pays you until age 65 you will need a much higher amount of TPD insurance, as the funds from this policy will need to cover your income for the rest of your life.
If you do not have income protection, or only have income protection which pays for a limited number of years rather than paying through to age 65, we recommend you increase your income protection accordingly. If this is not an option, increasing your TPD insurance could be a viable alternative.
There is no particular amount of TPD insurance that will suit the average tradesman since we all have different circumstances as well as different needs and objectives.
How much does TPD insurance cost?
The premiums for TPD insurance will vary greatly depending on a number of different factors.
Factors such as your age, occupation, smoking status and the level of cover required will all affect your TPD insurance premium. With regards to your occupation, usually trades considered higher risk will attract higher premiums.
Standard trades such as an electrician, plumber or carpenter will attract fairly standard TPD premiums, but some unskilled trades such as labourers will attract higher premiums. Other trades considered higher risk such as roofing contractors or scaffolders will also attract higher rates.
Types of TPD insurance
TPD insurance comes in two different policy definitions, and the definition you choose can have a major impact on the success of any claim.
The first definition is known as ‘any occupation’. This type of policy will payout if you suffer an injury or illness and a doctor believes that you will be unlikely to return to any occupation that you may be suited to by experience or training.
The second definition is known as ‘own occupation’. This policy will payout if a doctor believes that you will be unlikely to return to your own occupation.
To put this into content, let’s say you were an electrician and you lost the use of one hand. Obviously you would not be able to work as an electrician anymore, so if you had an ‘own occupation’ TPD policy you would expect the claim to be paid out.
But if you had an ‘any occupation’ TPD policy, the doctor and insurance company may deem that you could still work in a different, but still suitable role. This could be working as a technical trade teacher or some other role in the electrical industry that doesn’t require the full use of both hands.
As we can see, the definition you choose on your TPD insurance policy can be extremely important. Note that an ‘own occupation’ policy will generally attract a slightly higher insurance premium, but for most tradesmen it will be worth it.
Is TPD worthwhile for a tradie?
Absolutely! Some tradesmen will think that they can rely on workers compensation or Centrelink benefits. Whilst these schemes may allow you get by, they won’t exactly allow for a great quality life for you and your family.
With TPD insurance however, you can choose a level of cover that ensures you and your family will be looked after financially when things go wrong.
TPD money can’t buy or guarantee happiness, but it certainly makes things easier.
Choosing a TPD insurance policy
Although TPD policies are relatively similar between the different insurance companies, there are various features and benefits which can differ.
Some policies will be more suitable for certain trades than others. For example the best policy for a carpenter might not be the best policy for an electrician.
You also need to keep in mind that certain trades may not be eligible for an ‘own occupation’ TPD policy with every insurer. Some of the unskilled or high risk trades will be limited to an inferior ‘any occupation’ policy by some insurers, so it pays to shop around and find an insurer who will offer the best definition for your trade.
To find the best insurance policy to suit your needs and your trade, as well as providing the best value for money and meeting your budget, it is best to speak with an insurance expert who knows the building and construction industry as well as the other trades.
Here at Tradesman Insurance we have a network of financial advisers and insurance brokers who can help to get you the cover you need at the right price.
More information
For more information on this form of tradesman insurance please give us a call or complete our simple online quote request.
