If you are a working Australian, you may well have heard of Total and Permanent Disability (TPD) Insurance, whether it was when you were establishing your super fund or speaking with your financial adviser. Despite more than nine million Australians having this coverage, many don’t understand what TPD Insurance is.
This article will help you understand what TPD insurance is, how it can benefit you, factors to consider when choosing the right TPD insurance, and how to get one.
What does TPD stand for?
TPD stands for Total and Permanent Disability. It is a type of insurance policy that pays a lump sum in case a person is unable to ever return to work permanently due to injury or illness, causing a total and permanent disability.
Australians use TPD insurance to secure their financial stability during a major life turn because of their disability. The TPD payout can be used to cover medical bills and mortgage payments or to continuously provide financial support to the family.
The types of TPD Insurance available
The definition of being declared as totally and permanently disabled under the TPD insurance is usually based on these types:
| Own Occupation TPD Insurance | Any Occupation TPD Insurance | Activities of Daily Living TPD Insurance | |
|---|---|---|---|
| Definition | Refers to being unable to work permanently in the same occupation at the time of disability. | Refers to being unable to permanently work again in any occupation that is related to the insured’s education, experience, or training. | Focuses more on the inability to perform two or more of the daily living activities permanently and not on the ability to work. |
| Coverage | Pays a benefit if you become unable to work in the same occupation you held before the disability, even if you can still perform a job in a different role. | Pays a benefit if you become unable to work in any job that is related to your education, training, or experience. | Pays a benefit when you become unable to work and are unable to take a bath, eat, and/or dress. |
| Claim Difficulty | Has a higher probability of getting approval as it is easier to prove the disability. | More difficult to prove disability given the broader definition of the coverage. | The most difficult definition to be approved for a claim is due to the additional requirements of daily living activities. |
| Cost | More expensive due to comprehensive coverage. | Less expensive, but may require a severe medical condition to process a successful claim. | Often, the least expensive type of insurance due to a higher threshold for insurance claims. |
| Commonly Available/Offered | Less common due to its comprehensive terms and cost of the premium. | The most common type of TPD insurance due to its affordability. Often obtained through the superannuation fund. | Not a common type of TPD insurance. |
| Insurable Age Limits | The minimum entry age is 18 years old, and the maximum is 59 to 65 years old, depending on the insurer. The term of the benefit is normally until the age of 65. | The minimum entry age is 18 years old, and the maximum is 59 to 65 years old, depending on the insurer. The term of the benefit is normally until the age of 65. | The minimum entry age is 18 years old and the maximum is 59 to 65 years old, depending on the insurer. The term of the benefit is normally until the age of 65. |
| Suitable For | For individuals with highly specialised skills at their current job. | For individuals who are looking for TPD coverage with a lower cost of the premium and plans to have a flexible career path in the future. | For individuals who want to have financial support when faced with the inability to perform their daily living tasks. |
1. Own Occupation TPD Insurance
Own Occupation TPD insurance offers:
Higher chance of payout – the comprehensiveness and specific coverage requirement of this type of TPD insurance gives a higher chance of getting approved for a payout.
Financial security to cover specialised skills – offers financial support to cover the inability to utilise the specialised skills to earn a living.
Financial peace of mind – specialised skills are often associated with a high-paying job. Having insurance coverage allows the individual to perform at their best in their job.
This type of insurance is best for individuals whose specialised skills are difficult to replace in a different job. In most cases, they are the pilots, surgeons, ship captains, miners, and others.
Considerations:
- This is the most comprehensive type of TPD insurance available.
- A detailed claims application and strong medical evidence are needed to prove disability.
- Given the higher probability of getting successful claims, the cost of premiums can be more expensive.
2. Any Occupation TPD Insurance
Any Occupation TPD insurance offers:
Broader scope of coverage – provides coverage for the inability to work in any occupation that is related to your education, experience, or training.
Less expensive – premiums cost is lower as this type of TPD insurance as the threshold for insurers for approval is more strict.
Financial support – pays benefits that can be used for medical treatment, recovery, or medical home upgrades.
This type of TPD insurance is best for individuals who want to have less expensive coverage and are planning to have a different career path in the future.
Considerations:
- Typically, insurance providers have higher thresholds for granting approval on the claims.
- Waiting periods should also be considered as most insurers have different waiting periods before you can process a claim.
- This is the most common type of TPD insurance and is mostly obtained from superannuation funds.
3. Activities of Daily Living TPD Insurance
Activities of Daily Living TPD insurance offers:
Quality of life coverage – provides financial support when you are unable to perform two or more daily living activities such as eating, bathing, or dressing.
Ease of claim – the insurance claim is based on the insured’s inability to perform daily living activities.
Financial support for various needs – the payout benefit can be used for treatment and recovery, coverage for living expenses, or debt repayment.
Activities of Daily Living TPD insurance are best for individuals who are looking for coverage beyond their ability to work.
Considerations:
- For some TPD insurance, the activities of daily living can be an add-on to existing policy.
- This type of TPD insurance has a lower benefit amount compared to other types of TPD insurance.
Understanding which type of TPD insurance you have will be crucial when you need to process your claim.
Issues With TPD Definitions
One of the main issues with the TPD definitions is that it can be difficult to prove that you are totally and permanently disabled. The terms Totally and Permanently both carry with them significant burdens of proof due to their significance.
As a result, many people who are legitimately disabled may not understand what is required to claim their TPD coverage.
If you are considering taking out TPD Insurance, it is important to make sure that you understand the definition of TPD and the eligibility criteria.
You should also consider whether you need Own Occupation or Any Occupation coverage.
What Are The Eligibility Criteria For TPD Insurance?
The typical requirements to be eligible for TPD insurance in Australia are:
- Working at least 20 hours per week for occupationally based benefits
- Generally, between the ages of 18 to 65
To be able to process a TPD claim, the usual eligibility requirements are:
- Have an active and valid TPD insurance policy at the time of disability
- Must meet the total and permanent disability definition of the insurer or the policy
- Must be no longer working for at least three consecutive months due to the disability
It is important to understand that each insurer and insurance policy can have different eligibility requirements. Therefore, it is best to communicate with your insurer or super to know if you are eligible for a claim.
How Much Does TPD Insurance Cost?
The cost of having TPD insurance can depend on various factors such as:
- Age – younger people will normally have lower premiums as they are less exposed to health risks
- Occupation – an occupation that involves risks can have higher premiums
- Health – people who have pre-existing health conditions will get higher premiums
- Lifestyle – smoking and consuming excessive alcohol can increase TPD premiums
- Amount of coverage – it is normal for a TPD insurance policy to cost more as the amount of coverage gets bigger
- Type of TPD insurance – Own occupation type of TPD insurance, while more comprehensive than others, can cost more
- If you work with a TPD insurance expert, you can customise your policy based on your budget and needs
What Does TPD Insurance Cover?
A TPD insurance policy can cover a wide range of medical conditions if it proves the individual’s total and permanent disability.
The common TPD claims in Australia are:
- Mental health disorders (depression, anxiety, PTSD, bipolar disorder, schizophrenia, and others)
- Musculoskeletal disorders (osteoarthritis, rheumatoid arthritis, scoliosis, lupus, and others)
- Injuries from accidents (loss of limb that causes permanent disability)
- Cancer (Severe and late-stage cancer that prevents an individual from working permanently)
- Nervous system disorders (parkinson’s and alzheimer’s diseases)
Ask your insurer to get the full list of TPD coverage.
Where Can You Claim TPD Insurance Payouts?
TPD Insurance claims can be paid out through several different channels, including:
- Your superannuation fund
- A rider to your life insurance policy
- A standalone TPD policy
Processing a TPD claim can be done individually or with the help of a professional TPD claims expert.
If you seek help from a TPD claims expert such as Curo Financial, the process will be easier and your chance of getting approved will be higher.
However, should you choose to process your claim individually, our free 7-step TPD claims process can guide you.
Once your TPD claim is approved, your payout will be paid to your super, and you have the option to withdraw as a lump sum, an income stream, or leave it to grow.
Want to know more about TPD insurance? Talk to an expert.
In Australia, there are thousands of insurance brokers where you can get a TPD insurance policy from.
However, there are only a few who have been truly helping Australians when it comes to financial and insurance planning. The best TPD advisor will work with you closely to identify your financial situation to be able to customise the TPD insurance coverage.
At Curo Financial, we have been in the industry for decades, helping hundreds of Australians get a customised financial solution and industry-leading insurance advice. We have worked with complex financial situations and provide assistance to TPD claim problems.
Send us a message, and one from our team will reach out to you.
General Advice Disclaimer
General advice warning: The advice provided is general advice only and in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.
- Salary Continuance VS Income Protection - April 15, 2025
- Insurance Advice For Entrepreneurs and Self-employed - March 19, 2025
- Comprehensive Insurance Advice For Business Owners - March 17, 2025
