TPD or Total and Permanent Disablement Insurance

By Matt Ireland, Evolution Financial Planning team


TPD is a common form of insurance that is often held alongside life insurance. TPD cover is designed to help you meet one-off and ongoing living expenses if you were to become totally and permanently disabled. This cover can also assist in meeting additional medical costs associated with your condition.

Due to the requirement of being totally and permanently disabled, this cover can be difficult to claim upon unless you meet strict eligibility criteria. These usually include a range of permanently disabling conditions such as paraplegia or severe mental illness.

TPD cover needs to provide for you and your family in the event that you cannot ever work again. Due to the similar financial needs, many people hold just as much TPD cover as they do life cover. This type of cover can be held inside or outside of super however the terms and definitions of each type of ownership can vary significantly.  

What’s the difference between owning TPD inside and outside of super?

The main difference is found in the definitions of each policy. TPD cover is provided as either an own occupation policy or an any occupation policy. Own occupation essentially means that you can claim on your TPD cover if you cannot perform the majority of the duties associated with your current occupation or field of employment. This definition is often easier to satisfy and is therefore more expensive. Any occupation differs in that your claim will only be paid if you are unable to return to work in any occupation that is suited to your education, training or experience. This is a much broader definition and can therefore be less expensive but harder to satisfy.

If you hold TPD through superannuation you are only allowed to be insured under the ‘any occupation’ definition. Therefore the benefit of paying from your super balance rather than your pocket may be negated by the less favourable definition. You may hold either any or own occupation TPD policies outside of super.

There are a number of other key factors that need to be considered when looking for TPD cover. It is important to discuss these with a professional to ensure you understand the complex terms and conditions. If you’d like to have an obligation free conversation with an adviser from Evolution please contact us on (02) 4903 1111.

Jane Hextell