Compare Total and Permanent Disability Insurance (TPD)

Each insurer defines TPD cover differently. Generally, to qualify for TPD insurance your illness or injury must cause you to be incapacitated to such an extent that you’re unlikely to return to work in any occupation you’re qualified for (through education, training or experience). If you’re expected to make an eventual recovery from your illness or injury, you are unlikely to qualify for a TPD benefit.

In some cases, milder conditions may be considered for partial claims. For example, the loss of a finger may not be severe enough to stop you from working. However, such an injury may qualify you for a limited insurance benefit (e.g. 25% of your full cover amount).

Generally speaking, anyone can apply to take out TPD insurance, but the success of your application will depend on your eligibility. For example, your medical history and pre-existing medical conditions may mean you’re ineligible for cover. It’s important you know what you’re covered for. Always read the relevant Product Disclosure Statement (PDS) when taking out cover. for an exhaustive list of inclusions and exclusions.

TPD policies will generally insure either ‘any occupation’ or just your ‘own occupation’. For example, say you are a professional musician, and lose one of your hands.

• Own occupation cover: You could claim on your TPD insurance because the injury prevents you from carrying out the duties of your own occupation.
• Any occupation cover: You could reasonably carry out another line of work that doesn’t require both hands. Therefore, you may not be able to claim TPD.

Your policy premiums, terms and conditions will vary depending on your insurance option, so be sure to read the relevant PDS and consider seeking financial advice before taking out TPD insurance cover.

Superannuation law permits members to hold TPD insurance inside of their superannuation fund, however, not every super fund offers it. Like any financial product, you should compare your options to ensure that you have the right policy ownership and cover for your situation. Paying insurance premiums through super will impact the amount you have available at retirement so it’s important to consider this before acting.

To make the claims process go as smoothly as possible, you’ll need to:

• Disclose all relevant information to your insurer when you apply for cover and at claim time.
• Satisfy the terms and conditions of your insurance policy.
• Provide the required evidence when you claim to prove your disability is permanent and absolute.

TPD insurance claims pay you a lump sum when you’ve suffered a permanent injury that prevents you from working. (The injury must be an insured event under the relevant PDS), while income protection pays a regular benefit (e.g. monthly) of a portion of your income while you’re unable to work due to your illness or injury.

Income protection insurance benefits are paid until you are able to return to work, or you have exhausted your benefit period, whichever is sooner. When choosing an income protection policy, you can typically nominate a benefit term ranging from two years, up to age 65, depending on your policy.

Trauma insurance pays a lump sum in the event life insured suffers a traumatic event, as specified within the relevant PDS. Unlike TPD insurance, you don’t need to be left permanently disabled to be able to claim on this policy.

If you’re injured in a workplace accident, you can file a workers’ compensation claim, since your insurance is not conditional on you only receiving compensation from one institution. However, the benefit you receive from your insurer can be impacted by workers’ compensation claims.

The National Disability Insurance Scheme (NDIS) provides any Australian under 65 with reasonable support to live their lives. You must have a permanent disability and be a permanent Australian resident to qualify for the scheme. While it is a useful program, it may not cover all your expenses and needs, but TPD may be able to help you cover them.