Total and Permanent Disability (TPD) Insurance

Ultimately, the conditions for a TPD payout depend not only on your provider and policy, but also what you are covered for, what your normal occupation is and the definition you choose (own or any occupation).

That said, you might qualify for a benefit payment due to sickness or injury if you meet any or all of these criteria:

• you’re unlikely to work in your occupation ever again
• you’re unlikely to work in any occupation again
• you’re unlikely to perform domestic duties ever again
• permanent loss of your functional capacity
• significant impairment to your whole body
• permanent loss of intellectual capacity
• loss of limbs and or vision
• unable to look after yourself ever again (which relates to the ‘activities of daily living’ policy definition

First up, think about the expenses you’ll need to cover if you’re sick or injured and unable to work, such as:

• medical and rehabilitation costs: for example, surgery, medication and or physiotherapy
• living expenses for you and your family: including home energy and internet bills, groceries, petrol, and school and childcare fees
• mortgage or credit card debts: consider any debts as well as interest payable on them
• other insurance costs: such as car insurance and home and contents insurance
• retirement savings: for example, if you’re unable to work and draw an income, your savings could quickly start to reduce as you draw upon it to sustain bills and living expenses
• in-home assistance: whether you could require paid in-home assistance from a third-party service provider such as a nanny or cleaner to assist with domestic duties

Most insurers will allow you to select the benefit amount to suit your needs. These benefits typically range up to $3,000,000. That said, the higher the benefit amount, the higher the premium, so be sure to take your budget into account when selecting TPD cover.

Like any insurance policy, there are certain factors that aren’t covered by most TPD policies, like:

• temporary illnesses or injuries
• high-risk activities
• hazardous occupations
• self-inflicted injuries
• drug or alcohol-related disabilities

Age restrictions tend to vary across insurers. You can usually take out a TPD policy from 18 years old with many policies covering individuals up until they’re 70.

It’s also worth noting that some TPD policies expire once you hit a certain age. However, this can vary, so be sure to read your PDS or check with your insurer.

Ultimately, this depends on the severity of your condition and the individual insurer. In some cases, your policy might include a loading to cover the higher chance of your making a claim, which means more risk for the insurer. With a loading, you’ll end up paying a specified amount on top of your regular premium. In other cases, certain pre-existing conditions might attract an exclusion instead or may decide not to allow you to take out cover.

When it comes to claiming TPD, you need to notify your insurer as soon as possible after an injury or illness. Depending on your disability and what TPD cover you have, your insurer may ask for the following:

• medical reports and test results from your doctor
• details of your work duties
• payslips and tax returns

Based on this information, your insurer will determine if you’ve suffered a TPD and the payout amount.

While some super funds include TPD cover as default, it’s important to check your cover to make sure you’re sufficiently protected in case something were to happen.

As of 31 December 2024, when you purchase TPD insurance, you generally get a choice between two types of premiums:

• Variable age stepped premiums: the cost of cover increases each year, as premiums are based on your age at your policy anniversary. This is mainly due to your age and the increasing chance you’ll make a claim.
• Variable premiums: charges a higher premium compared to variable age stepped, to begin with, as the insurer averages your premiums over a period of time. Overtime variable premiums may be cheaper than variable age stepped premiums.

It’s important to be aware that neither premium structure is fixed and premiums will increase overtime if the benefit amount increases, the insurer updates their premium rates, or in response in government charges and CPI.

Before you decide on your provider, it can be worth double-checking:

• If the policy covers your ‘own occupation’ or ‘any occupation’?
• Under what conditions might a partial benefit be payable?
• What are the policy limits?
• What are the policy exclusions?
• What are the waiting periods before you can make a claim?
• What are the premiums?

There’s no denying that price is an important factor to consider when comparing policies, but it’s not the only factor worth considering. It’s just as important to make sure you understand the level of cover included, and the potential benefits if you were to make a claim.

Before you take out TPD insurance, it’s a good idea to ensure there’s nothing that could potentially get in the way of you making a claim. It’s a legal requirement to take ‘reasonable care’ when signing up for a policy. This means you should be honest and upfront with your insurer when answering all their questions. They’ll usually ask for your:

• age
• job
• medical history and any pre-existing conditions
• family history
• lifestyle (for example, whether or not you smoke can affect your premiums)
• any high-risk hobbies (such as dirt bike riding, or sky-diving)

Depending on the provider, you may be required to perform a blood test in order for the insurer to have an accurate view on your health. This allows them to make a more accurate assessment of your risk level.

The cost of TPD insurance varies depending on the person applying for it and whether they’re buying it separately, adding it on to their super or purchasing it as a package with life insurance.

As part of the application process, your insurer will ask you for a range of information that they’ll use to work out the cost of your premium, including:

• age
• gender
• occupation
• smoking status
• health

Depending on your circumstances, loadings could be applied to your policy, meaning you’ll end up paying a higher premium for TPD insurance.

Yes, depending on your policy and provider you might be able to insure multiple people on one policy. For example, a married couple could decide to insure both of their lives in one policy. Depending on the insurer, you could be eligible for either a percentage or flat rate discount on your premiums when a second person is added to the policy.