Learn About What is Total and Permanent Disability

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What is Total and Permanent Disability

Total and Permanent Disability

A serious injury or illness can make it difficult or impossible for you to continue to work.

TPD cover provides you with a lump sum payment, which can help with the costs of rehabilitation, medical costs, making required alterations to your home, and paying down debt. The extent of cover varies between insurers, and some will offer a partial payment. Check out our product comparison to see which insurers cover which conditions.

Want more detail on TPD Cover including a quick quote? Check out our deep dive here.

Insurer OnePath have a great explanation.

Occupation Definitions

A key element of Total and permanent disability cover is choice of occupation definition, with the two most common being 'any' occupation and 'own' occupation. This refers to the definition of your ability to continue to work following your disability event. The insurance company will assess your disability against this measure when they assess your TPD claim.

To meet the “Any” Occupation TPD definition you must be Totally and Permanently Disabled and unlikely to be able to work in any occupation for which you are reasonably suited by training, education, or experience.

Therefore, if there is an option that you can work following the TPD event, even if not in your current occupation, your claim may be declined by the insurer. This cover is less expensive than the Own Occupation TPD cover, however it is harder to successfully claim.

To meet the Own Occupation TPD definition, you must be Totally and Permanently Disabled and unlikely to work in your own occupation again. This cover is more expensive than Any Occupation TPD, however it is easier to successfully claim. However, the Own Occupation definition is not available for all occupations or within Super.

Super Policies and the Own Occupation definition

While Own Occupation definition is not available within Super you can establish a Superlink arrangement, where a single cover is held across two policies. One sits inside super, is paid from your super account and will have an Any Occupation TPD definition. The other sits outside of super, is paid for from your cash flow and has an Own Occupation definition. In the event of a claim, the Any Occupation definition is assessed first and, if the claim is not successful, the Own Occupation definition can be assessed. Any successful claim reduces the cover across both policies.

Linking cover and Extra Cost Options

TPD cover can be linked to your Life cover, where essentially any claim payment made on the TPD will reduce the benefit available under the Life cover. This option could make sense for you if you are covering large one-off expenses, such as a mortgage which you only need to cover once.

There are two extra-cost options available to purchase that will return the Life cover to the original amount following a successful TPD claim.

TPD Buy-back - After some time (often a year after the TPD claim), the insurance company will offer you this benefit, which will bring your Life Cover back to the original sum insured, for an additional premium.

Double TPD - For an extra cost, you can have your Life cover reinstated after a TPD claim on a linked policy, plus the life cover premiums will normally be waived whilst you are totally and permanently disabled. (Provided you survive the claimable TPD event).

Both these options have many benefits and caveats. If you are interested in these covers why not play around with our product comparison tools to assess what might work for you.

Insurer AIA have a very comprehensive explanation if you'd like to know more.