Total and permanent disability (TPD) insurance – Moneysmart.gov.au

October 16, 2022

0 82 3 minutes read

Permanent injury or illness may make it difficult or impossible to return to work. tpd insurance can provide a financial safety net to help you and your family pay for medical and rehabilitation costs.

Maybe you are interested

what does the tpd insurance cover

tpd insurance pays a lump sum if you become totally and permanently disabled due to illness or injury.

Reading: What does tpd insurance cover

Each insurer has a different definition of what it means to be totally and permanently disabled. you can cover it for:

your own occupation : You cannot go back to work at the job you had before your disability. this coverage is more expensive and is usually only available outside the supermarket.
Any Occupation: You will not be able to return to work in any job suitable to your education, training or experience. this coverage is cheaper but has a higher threshold to claim so it is less likely to be paid out.

read the product disclosure statement (pds) to learn how your insurer defines total and permanent disability. Call the insurer or your superfund if you have questions about the policy.

decide if you need tpd insurance

When deciding if and how much you need tpd insurance, think about the expenses you’ll need to cover if you’re permanently disabled and unable to work. These could include:

living expenses for you and your family
payment of debts such as a mortgage or credit card
medical and rehabilitation costs
savings you want for retirement

Also think about what you have that could help pay these costs. this could include:

private health insurance that can help pay for medical expenses
if you have trauma or income protection insurance, it can help replace lost income. you can have this insurance through your super fund
any savings or investments you can sell
what support from family or friends may be available

The gap between the amount you have and the amount you’ll need can be a guide to how much tpd coverage you may need.

If you need help deciding if and how much you need tpd insurance, talk to a financial advisor.

how to buy tpd insurance

check if you already have tpd insurance through your supermarket. Most superfunds offer default TPD coverage that is cheaper than buying it outright. you can increase your level of coverage through your super fund if you need to.

You can also buy tpd insurance at:

a financial advisor
insurance broker
an insurance company

tpd insurance can be purchased alone or combined with life coverage. If bundled, your life coverage may be reduced by any amount paid on a TPD claim. consult the pds or ask your insurer.

tpd insurance premiums

You can usually choose to pay for tpd insurance with:

tiered premiums – recalculated at each policy renewal, typically increasing each year based on the increased likelihood of a claim as you age
level premiums: charge a higher premium at the beginning of the policy, but changes in cost are not based on your age, so increases occur more slowly over time

Your choice of tiered or level premiums has a big impact on how much your premiums will cost now and in the future.

compare tpd insurance policies

what to tell your insurer

An insurer will ask you questions when you apply for or change your insurance. These questions may be about your:

age
job
medical history
family history, such as history of disease
lifestyle (for example, if you are a smoker)
high-risk hobbies or sports (such as skydiving)

If an insurer doesn’t ask for your medical history, it may mean the policy has more exclusions or narrower policy definitions.

The information you provide will help the insurer decide:

if they should insure you
how much your premiums will be
terms and conditions of your policy

It is important that you answer the questions truthfully. providing misleading or incomplete answers could lead an insurer to cancel or modify your coverage, or deny a claim you make.