What Is a TPD Insurance Payout?
A TPD insurance payout is the benefit paid after a TPD claim has been approved, based on the amount of cover you held when you became totally and permanently disabled.
Unlike income protection, TPD insurance is designed to pay a capital amount - most commonly as a lump sum - to support long-term financial needs if you can never work again.
This page focuses on what is paid and how, not the claims process itself.
💰 How Much Is a TPD Insurance Payout?
The amount paid is generally determined by:
Your sum insured
The date of disablement (not the approval date)
Any indexation applied before disablement
Reductions due to linked cover
How TPD Insurance Payouts Are Paid
💰 Lump Sum Payments
- Reduce or clear debt
- Fund long-term living costs
- Cover care, treatment, or lifestyle changes
📅 Instalment Payments
Some policies allow the benefit to be paid in instalments over time, chosen when the policy is set up.
Where the Payout Is Paid Depends on Where the Cover Is Held
Inside Super:
- Paid directly to you (or the policy owner)
- Usually tax-free
- No superannuation release rules apply
Outside Super:
- Paid to the super fund trustee
- Must be released under superannuation law
- Some or all of the payout may be taxed
How SuperLink Affects TPD Payouts
With a SuperLink arrangement, TPD cover is split between a policy held inside super and a linked policy held outside super. They essentially act as one policy - with many elements, like sum insured, mirrored across both.
If a payout is made under one policy, it generally reduces the insured amount under both. This prevents double payment while allowing part of the benefit to be accessed outside super where superannuation rules would otherwise restrict payment.
SuperLinking affects:
Who receives the payout
You or your super fund?
How it's taxed
Your age can impact the taxation treatment of benefits in super.
What cover remains afterwards
Payment on one policy reduces the remaining benefit on the other.
When Is a TPD Insurance Payout Made?
A payout is made after the claim is approved and any required survival period is met. Timing can vary depending on:
- Whether the cover is inside or outside super
- Trustee processing (for super-held benefits)
- Whether the benefit is lump sum or instalments
Once approval and legal requirements are satisfied, payment is usually made promptly.
Is a TPD Insurance Payout Taxable?
In most cases:
- ✅ Outside super: usually not taxable
- ⚠️ Inside super: may include taxable components
Tax depends on your age, super laws, and whether it qualifies as a disability super benefit.
What Happens After a TPD Payout?
- If full payment is made TPD cover usually ends
- Linked Life or Trauma cover may be reduced or cease
- Buy-back options may apply
📌 Key Takeaway
A TPD payout isn't just about approval - it's about:
- How much is paid
- Where the money goes
- When it can be accessed
- How tax and structure affect the outcome
Understanding payouts separately from claims helps avoid surprises at the point where financial certainty matters most.