Total and permanent disability (TPD) insurance – Moneysmart.gov.au
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.
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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
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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
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Before you buy tpd insurance, compare policies to make sure you get the one that’s right for you. check:
- whether it covers ‘your own occupation’ or ‘any occupation’
- waiting periods before you can claim
- limits on coverage
- premiums: now and in the future.
A cheaper policy may have more exclusions or may become more expensive in the future.
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:
- 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.
make a tpd insurance claim
if you want to file a tpd claim, see how to file a life insurance claim for information on what to do.