TPD Insurance

Total and permanent disability (TPD) insurance offers protection in the form of a lump-sum payment – potentially as high as $5m – if you suffer a permanent injury or illness during your policy term and are no longer able to work.

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Fund	Maximum Cover	Minimum Cover	Maximum Entry Age	Expiry Age	Stand Alone or Add ON	Apply
Nobleoak	$5,000,000	Not Stated	59	75	Add on	Get quote
Real	$1,000,000	$50,000	59	65	Add on	Get quote
Medibank	1,250,000	100,000	60	65	Add on	Get quote
OnePath	$5,000,000	$50,000	75	100	Add on or Stand Alone	More info
AIA	$5,000,000	$100,000	63	70	Add on or Stand alone	More info
Allianz	$1,500,000	$100,000	55	65	Add on	More info
AMP	$5,000,000	$50,000	60	99	Add on or Stand alone	More info
Asteron	$3,000,000	$25,000	62	100	Stand alone	More info
Australian Super	$3,000,000	Not stated	65	Not stated	Stand alone	More info
Bendigo	$750,000	$100,000	59	69	Add on	More info
BT	Not Stated	Not Stated	59	99	Add on or Stand Alone	More info
ClearView	$5,000,000	$50,000	60	99	Add on or Stand Alone	More info
CommInsure	$750,000	$100,000	59	65	Add on	More info
Guardian	1,000,000	$50,000	59	Not Stated	Add on	More info
HCF	$50,000	$7,500	74	Not Stated	Stand Alone	More info
Kogan	$1,000,000	$50,000	64	65	Add on	More info
MetLife	$5,000,000	$25,000	60	Not Stated	Add on or Stand Alone	More info
MLC	$3,000,000	$50,000	60	100	Add on or Stand Alone	More info
NEOS	$3,000,000	$50,000	60	99	Add on	More info
RAC	Cannot exceed the Life cover amount.	$100,000	59	65	Add on	More info
RACQ	$750,000	$100,000	59	65	Add on	More info
St. George	Not Stated	Not Stated	59	99	Add on or Stand Alone	More info
TAL	$2,000,000	$100,000	59	65	Stand Alone or Add on	More info
Westpac	Not Stated	Not Stated	59	99	Add on or Stand Alone	More info
Woolworths	$1,000,000	$100,000	60	65	Add on	More info

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Level of Protection UnsureNone$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000$1,000,000$1,250,000$1,500,000$1,750,000$2,000,000

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What is TPD insurance?

TPD insurance is protection for you if you become totally and permanently disabled and are unable to work due to those disabilities. It is designed to help replace income, cover medical expenses and ongoing debts and bills that you'd struggle to pay if you can no longer work.

According to ASIC, about 9 million Australians hold TPD insurance and more than 4 in 5 (86%) do so through their super fund.

In simple terms, the way TPD cover works is: you pay your insurer a monthly or annual fee and in return, receive one large payment from it if you become permanently disabled and are unable to work.

What are the main types of TPD insurance?

There are two main types of TPD insurance to know about:

1. Own occupation. You can claim if you're unable to work again in the job you did before your disability.
2. Any occupation. This cover can be claimed if you can no longer work in any jobs suited to your education, training or experience.

If you take out "any occupation" TPD cover, you get a payout if you can no longer return to any form of work related to your experience. "Own occupation" TPD insurance pays a lump sum if you can no longer return to your usual occupation.

Here's when TPD insurance is needed and how it is used:

1. A situation forces you to stop working.
Common examples include loss of sight or hearing and mental illness.

2. Your insurer assesses your claim.
It'll look at your injury or illness and confirm that you can't return to work.

3. Receive your benefit payment.
In addition to your income, payment can help towards debt and medical expenses.

How much does TPD insurance cost?

The average cost of TPD insurance is $15.29* per month. However, the fee you pay will depend on factors such as your age, gender, occupation, lifestyle choices and health. If you're a "blue collar worker", your premiums are typically a little more than "white collar workers" because your job generally involves more risk. Similarly, women typically qualify for lower premiums because they live longer than men.

TPD insurance costs will also depend on how big a TPD benefit you need. For instance, someone looking for a $500,000 lump sum will pay a larger fee (premium) than someone with a $200,000 payout agreement.

• White collar workers
• Blue collar workers

Average prices were taken from a sample quote of all policies available on Finder's quoting engine. Details of the quote were for a 35-year-old non-smoker.

Factors that affect the cost of cover

• Age

  This is one of the most important factors to affect your premiums. TPD insurance premiums are generally stepped, which means as you get older, your premiums get more expensive each year.

• Gender

  Women typically qualify for lower premiums because they live longer than men.

• Occupation

  Your job affects how much you'll pay for cover. The more dangerous the job the more you'll pay for TPD cover.

• Family medical history

  Insurers take into account a range of personal situations including your family's medical history.

• Current health indicators

  Your premiums can be affected by a range of health indicators including your blood pressure, cholesterol and red blood cells.

• Lifestyle choices

  If you smoke, drink or participate in high-risk activities on a regular basis, these factors are also taken into account when calculating your level of risk.

*Average prices were taken from a sample quote of all policies available on Finder's quoting engine. Details of the quote were for a 35-year-old non-smoker.

What are the benefits of TPD insurance?

Some TPD insurance benefits and features you should be aware of include:

• Total disablement benefit. This is the benefit that's paid if you're disabled due to an injury or illness and are unable to perform work duties.
• Partial disability benefit. This is the amount that is payable in the event of partial disablement e.g. loss of one arm, one leg or sight in one eye.
• Buyback option. If your TPD cover is part of your life insurance, when a TPD claim is paid, the amount will be deducted from your life cover amount – a buyback option lets you reinstate that amount.
• Death benefit. A benefit amount may be payable in the event of your death, even if your TPD cover is a standalone policy.
• Loss of independence feature. In some cases the lump sum payment available with TPD insurance can convert to a loss of independence payout, based on the insured's ability to care for themselves.
• Guaranteed future insurability. This feature allows you to increase the coverage of your policy during important life events, such as marriage, children or mortgage, without needing to undergo another medical examination, even if your health situation has changed.
• Indexation benefit. Sum insured will increase annually in line with the Consumer Price Index (CPI) to keep up with inflation.
• Premium freeze option. This option allows you to choose to retain your current annual premium under a stepped style when you reach a certain age and it will reduce the insured amount gradually.

Is TPD insurance included in my super fund?

Yes, it often is. However, it's not available with every super fund so it depends on which one your employer uses. If you want to check the level of cover provided by your super fund, you can look at your member statement or contact your super fund directly.

While TPD insurance inside super is usually cheaper than standalone TPD cover, you often get what you pay for. TPD cover inside super can't tailor a policy to your personal needs so it more than likely won't be able to cover all outstanding debts if you do become permanently disabled.

Pros and cons of TPD insurance inside super

TPD cover is sometimes included in the superannuation you receive from your employer. However, there are a few pros and cons of getting TPD insurance inside super.

TPD insurance definitions

TPD is defined as being totally and permanently disabled and unable to work as a result. Insurers further define their interpretation of TPD inside insurance policies. These definitions impact when, or if, a TPD claim will be paid out.

As previously mentioned, the 2 main definitions of TPD are 'Any occupation' and 'Own occupation. You may also come across 'Activities of daily living', which is a rarer and more restrictive type of cover.

Any occupation.

This pays a lump sum if you become permanently disabled and are unable to work in your own occupation or any occupation to which you are suited by education, training or experience.

Own occupation.

This pays a lump sum if you become permanently disabled and are unable to work in your own occupation. This is the most expensive form of TPD insurance because the terms are very specific and a payout is more likely.

Activities of daily living

This ignores your occupation and pays a lump sum if you become permanently disabled and are unable to independently conduct two or more of the five listed Activities of Daily Living (e.g. eating, bathing, dressing etc.)

TPD insurance tips

When taking out TPD insurance and calculating the cover you need, you should consider:

• Your debts. If you have a mortgage, loan or any debt, you need to factor that into the amount of TPD cover you need.
• Your level of health insurance. If your health insurance won't cover all the medical bills should you become permanently disabled, factor the costs into your TPD coverage.
• Your super fund. If you have TPD insurance inside super, you might be able to receive a small payout through your super as well.
• Family assistance. If you or your partner become disabled, who will take care of the home duties? You might need to consider budgeting for family assistance.
• The level of coverage you want. Are you willing to sell your home and move somewhere cheaper? If not, then you want enough coverage to pay for all your debt repayments.

Frequently Asked Questions about TPD insurance

• How much TPD insurance do I need?

  When determining how much TPD insurance you may need, a very rough rule of thumb is to take out coverage that is 10 times your annual salary.

  However, everyone is different so you should consider your own circumstances and seek advice on the appropriate level of cover for you. A financial adviser could support your decision making if required.

• Can you add TPD insurance to my life insurance policy?

  Yes, you can add TPD cover onto your existing life insurance policy to have a more comprehensive coverage.

  If you're comparing a new deal, be sure to check and see if the TPD cover is offered as a standalone product or an add on.

• Should I bundle TPD insurance with life insurance?

  Figuring out whether you want TPD on its own or bundled with life insurance essentially boils down to the risk you're willing to take, based on your personal circumstances. It can make cover cheaper, and if you're sure to calculate your living expenses, it can still leave your loved ones with more than enough to pay off debts, home loans and other everyday living costs.

• Do TPD payouts affect Centrelink?

  Generally TPD payouts won't impact your centrelink payments, particularly if that insurance is held within super. However, a TPD payout is a form of income and you should always report any changes in circumstances to Centrelink and seek advice from them directly.

• If I suffer a partial disability, can I make a claim for TPD?

  You may be able to, depending on the specifics of your policy. Some insurers will pay out for income that's lost if you can only work at a reduced capacity because of sickness or injury.

  Also, some policies provide partial payment if you suffer certain disabilities. For example, after the loss of limbs or loss of sight.

  Read more about TPD insurance claims in our comprehensive guide.

• Can a self managed super fund (SMSF) own a TPD insurance policy?

  Taking out insurance through a superannuation fund is a common option and if you have set up your own SMSF then your fund can own your TPD policy.

  In the event of a claim, the benefit is paid to your SMSF and you must meet the guidelines for a superannuation TPD policy to allow you to withdraw the benefit payment before your retirement.

• Do TPD policies have a waiting period?

  Depending on the policy you choose, you may be required to be unable to work because of an illness or injury for at least three to six months, before you start receiving any benefit payouts.

• Can you claim TPD if you are not working?

  If you're no longer actively employed or are doing work that's unpaid but still your full-time activity, you may be eligible for one of the following types of TPD insurance:

  • Home Duties. This policy type is designed specifically for homemakers and offers cover for people for whom domestic duties are generally their full-time activity. Even if homemakers do not earn a salary, they still perform a host of vital duties in and around the home and to assist the rest of the family. Under a Home Duties definition, if you're no longer able to perform your regular domestic work you may receive a benefits. This type of cover can help with things such as home maintenance, childcare and the cleaning and cooking.
  • Non-working TPD. This option is generally not available when you first take out TPD cover but then becomes available when you reach a certain age. However, most working TPD policies will convert to this definition on your 65th or 70th birthday. Under this definition, you will be eligible to receive a partial benefit if you lose your ability to perform a specified number of daily living tasks or suffer other specific injuries, covered below.
  • Modified TPD. This is a 'working' TPD policy where you add on features of a 'non-working' policy. These may let you claim on disabilities outside the normal scope of TPD policies when you are still working age.

• Does TPD insurance cover loss of hearing?

  This is a little more tricky. In order to trigger a payout, TPD policies require the policy owner meets the criteria of total and permanent disablement as a result of their illness or injury.

  Meeting the criteria

  Depending on what's decided on when you apply:

  • You will need to be unable to work for a consecutive number of months in your own occupation (easier to prove)
  • Or unable to work for a consecutive number of months in any occupation (harder to prove)
  • Ongoing care is also required

  The person claiming will need to seek the ongoing care of a medical professional. The insurer must also deem that the severity of the sickness or illness means that the insured is unable to ever work in regular remunerative work for which they are fitted either by education, training or experience. For an increased premium, applicants can elect to take out cover that will provide a benefit if they are unable to return to their own occupation.

• What is a duty of disclosure? Do I have to do this?

  When looking for TPD cover, you have to disclose any relevant information requested by the insurance provider to allow them to assess your situation. This is legally binding and you must disclose any relevant, known information to avoid the legal consequences of not informing the underwriter about information that may affect the policy.

• What illnesses or injuries are excluded from a TPD policy?

  In most cases only intentional, self-inflicted injuries will be excluded from receiving a successful claim payment.

• Is a TPD benefit paid from the benefit of a linked life insurance policy?

  When your policies are linked and you make a successful claim on your TPD policy, the benefit you receive will be deducted from your life insurance amount. If you don't want your life insurance to be affected by a TPD claim, you can choose a double TPD policy, a TPD buyback benefit or a standalone TPD policy.

• Does TPD insurance cover you when you're overseas?

  You can find TPD policies which will cover you for illnesses or injury you incur while you're travelling overseas or living overseas for an extended period of time. Just make sure you check the conditions of your particular policy with your insurer.

• Who is eligible for the National Disability Insurance Scheme (NDIS)?

  In order to qualify for the NDIS, you need to be a resident, permanently disabled and under 65. While the scheme is a great option if something bad happens, it often doesn't cover all your needs and expenses, which is where TPD insurance comes in.

• What's the difference between TPD insurance and income protection?

  While income protection insurance provides you with a sustained income if you're unable to work due to illness or injury, TPD insurance comes in the form of a lump sum payment, helping you take care of any debts and living expenses, as well as any immediate medical bills.

  Trauma insurance, on the other hand, pays for critical illnesses and incidents in a lump sum but not permanent disablement.

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