Introduction
Total and Permanent Disability (TPD) Cover provides a lump sum payment if you become permanently disabled and unable to work again. While TPD can be held as a standalone policy, it's often linked to Life Cover or Trauma Cover. This is a cost-effective way to get broad protection, but one that comes with trade-offs.
🧩 What Is Linked TPD Cover?
Linked TPD means your TPD insurance is connected to another benefit, usually Life Cover or Trauma Cover. These covers share a combined benefit pool so a claim on one will reduce the amount available on the other.
Linked cover can apply:
- Within a single bundled policy (e.g. Life + TPD + Trauma)
- Inside or outside superannuation
- Across policies (e.g. superlink where one policy is in Super with a mirrored policy outside super)
🔄 How Linked TPD Cover Works
Linked to Life Cover
If your TPD Cover is linked to your Life Insurance:
- Your TPD Sum Insured is part of your Life Cover
- A TPD claim reduces your Life Cover by the amount paid
Example:
You have $1 million Life Cover and $500,000 TPD Linked Cover. If you successfully claim the full TPD benefit:
You receive $500,000 TPD benefit
Your Life Cover reduces to $500,000
Linked to Trauma Cover
If your TPD is linked to Trauma Cover:
- They act as a combined insured amount
- A claim on either benefit reduces or cancels the other
Example:
You have $500,000 Trauma Cover and $250,000 TPD Linked Cover. If you successfully claim the full Trauma benefit:
You receive $500,000 Trauma benefit
Your TPD Cover reduces to $0
💡 Why Link TPD to Life or Trauma Cover?
Pros
- ✅Lower premiums than standalone TPD
- ✅Simple bundled structure
- ✅Covers your big debts once (mortgage, education etc)
- ✅Good for cost-conscious buyers
Cons:
- 🚫A claim on one benefit reduces another
- 🚫You might be left with reduced Life or Trauma Cover when you need it
- 🚫You can't claim full amounts on both covers without adding extra cost options
⏳ Survival Periods: A less well known but Critical Rule
A survival period is a clause that requires the insured person to survive a minimum number of days after becoming disabled for a TPD benefit to be payable.
Typical Conditions:
- Usually 14 days, sometimes up to 30
- In linked TPD policies, if the person passes away within that period, Life Cover is paid, and the TPD is not
Example:
You have $1 million Life Cover and $500,000 TPD Linked Cover. You suffer a severe injury but pass away 10 days later.
No TPD payout (survival period not met)
Full $1 million Life Cover paid
🔧 Optional Benefits That Protect Life Cover After a TPD Claim
If you're concerned about losing Life Cover after a TPD claim, most insurers offer optional extra cost benefits to help protect your overall insurance plan.
🔄 TPD Buy-Back Option - Overview
The Buy-Back Option allows you to reinstate your Life Cover after it has been reduced due to a full TPD claim. This helps restore your death benefit, ensuring your family still has protection if you pass away later.
- Typically available 12 months after a full TPD payout
- You can repurchase Life Cover up to the TPD amount paid
- No medical underwriting required
- Must be requested within a specific timeframe
- Reinstated cover typically excludes add-ons (e.g. indexation, future insurability)
💼 Double TPD Option - Overview
The Double TPD Option allows you to receive your full TPD benefit without reducing your Life Cover. It's ideal for those who want maximum protection for both disability and death events.
- If a full TPD claim is paid, Life Cover remains unchanged
- Premiums are waived on the Life Cover amount equal to the TPD payout
- Life Cover continues until policy expiry (typically age-based)
- Cannot be combined with Buy-Back or certain other optional benefits
- A survival period is required (usually 8-14 days)
🔍 Key Features Comparison
| Feature | TPD Buy-Back | Double TPD |
|---|---|---|
| Life Cover retained after TPD claim | ❌ No Life cover for 12 months | ✅ Yes |
| Is reinstatement automatic? | ❌ No, it must be requested | ✅ Yes, if you meet survival requirements |
| Is underwriting required? | ❌ No | ❌ No |
| Premiums waived on Life Cover? | ❌ Payable following reinstatement | ✅ Waived on TPD amount paid out |
| Requires 100% TPD payout | ✅ Yes | ✅ Yes |
| Allows future cover increases? | ❌ No | ❌ No |
| Requires survival period | ✅ Yes | ✅ Yes |
| Cover Expiry Age (typical) | Age 65-70 | Age 65-70 |
📌 Key Takeaway: Should You Link Your TPD Cover?
Linking TPD to Life or Trauma Cover can save on premiums and keep your insurance plan simple. But it's important to weigh that against the impact on your total cover — especially in scenarios involving multiple events.
Buy-Back and Double TPD features offer smart ways to protect your Life Cover — each with pros, cons, and eligibility limits.
- If affordability is key → Linked TPD + potentially Buy-Back
- If maximum payout flexibility is your goal → Double TPD
Given the wide variation in TPD insurance costs, try our quick calculator to get a cost estimate tailored to your situation.
Frequently Asked Questions
📞 Need Help Structuring Your Cover?
If you're unsure whether to link your TPD or choose a standalone option, read Keep's other help guides, and use Keep's "adjust my quote" tool to see the premium impact of linking. If you still require assistance book a call.