What is TPD Insurance?

Total and Permanent Disability (TPD) Insurance pays out a lump sum of money if you’re permanently disabled. This means that if you can no longer return to either your usual occupation or any occupation (depending on your chosen policy), you get a payout.

This money can be used however you wish. That said, you’ll probably consider using it to help pay off your debts, put the kids through school, pay for your medical rehabilitation if need be, and more.

You can take out TPD with your Life Insurance policy, or as a standalone product.

What is covered?

Each insurer defines TPD differently, but here are some examples. Anyone expected to make an eventual recovery is not permanently disabled. Thus, they do not qualify for cover.

Milder conditions may also not be considered for claims. For example, the loss of a finger may not be severe enough to stop you from working. However, such an injury may qualify for a limited benefit (e.g. 25% of a full payout).

Essentially, anyone can apply for TPD Insurance, but the success of your application will depend on a number of things. For one, pre-existing medical conditions may mean you cannot get cover. For an exhaustive list of what is and isn’t covered, make sure you check out the insurer’s Product Disclosure Statement (PDS) when taking out cover.

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Am I insured if I can’t work in my usual job, or any job?

TPD policies will generally insure either ‘any occupation’ or just your ‘own occupation’. What does this mean? Say, for example, you are a professional musician who has lost one of your hands.

What about the National Disability Insurance Scheme?

The 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. It’s a wonderful program, but it may not cover all your expenses and needs. It’s in this circumstance that TPD becomes an attractive option.

What if I qualify for workers compensation?

No problem, you can file a worker’s compensation claim. Your insurance is not conditional on you only receiving compensation from one institution. However, the benefit you receive from your insurer is impacted by workers compensation claims.

How does TPD differ from Trauma or Income Protection?

TPD pays a lump sum, while Income Protection pays a regular benefit (e.g. monthly) of up to 70% of your income, although some do pay a lump sum benefit. Your Income Protection has a set term, at which point the money will stop coming in. This term could be anything from two years to a nominated age (e.g. 65), depending on your policy.

Trauma Insurance is different again. It pays for traumatic, critical illnesses and incidents in a lump sum. It is not for when you’re left permanently disabled.

How can I ensure a successful TPD claim?

Getting your claim approved comes down to…

  1. Disclosing any and all relevant information to your insurer when you make your application.
  2. Satisfying the terms and conditions in your insurance policy.
  3. Providing as much evidence at the time of claim to prove your disability is permanent and absolute.

Could I get TPD through my superannuation fund?

Yes you can, but it isn’t a feature available in every super fund. Like any financial product, you should compare your options to ensure that you find a value for money product, and have the right cover for your situation.

The information provided here is general only and does not consider your personal objectives, financial situation or needs. Before you decide to purchase a product, it is important to read the relevant PDS.

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