TPD insurance.

Total and Permanent Disability (TPD) insurance provides a lump sum payment should you suffer an illness or injury which totally and permanently prevents you from working again.

There are broadly two main definitions of Total and Permanent Disability:

• own occupation

The insured must show they have a total and permanent disability that prevents them from working in their own occupation which they disclosed when applying for this cover.

“Own occupation” is a more liberal definition of disability, because even if you can work in another occupation, you may still be eligible to receive disability benefits. Because it is relatively easy to qualify for benefits under this definition of disability, insurance companies are limiting the availability of this type of cover.

Own occupation cover is often more expensive, and may only be available to individuals who have clean medical history and work in a relatively risk-free occupation, and

• any occupation

The insured must show they are totally and permanently disabled and unable to work in their usual, or any other occupation for which they are reasonably suited by their education, training or experience.

“Any occupation” is often the cheaper option however it can be more difficult to meet the requirements of this type of disability definition.

Some insurers have a third definition available to clients – a “homemaker” definition. Payment of benefits under this definition would be based on the proviso the insured, through sickness or injury, is unable to do any normal physical domestic duties and will never be able to do so again.

Be aware

• You should ensure your insurance cover is adequate for your needs. Under-insurance could result in serious financial difficulty.

• Changes in your personal circumstances (ie, taking on additional debt, birth of a child) often necessitate higher insurance levels.

• There may be taxation consequences where a disability lump sum superannuation payout is made.

Article originally appeared at

Any advice given is of a general nature only and does not take into consideration your personal circumstances. Please consider the appropriateness of the advice before acting.

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