Total and Permanent Disability Insurance (TPD)
TPD Insurance
Typically, Total and Permanent Disability (TPD) Insurance provides you with a lump sum benefit if you become totally and permanently disabled and cannot work in your current or any other potential occupation. It’s generally paid if your disability has kept you from working for the past three to six months and was caused by an accident or illness.
There are typically two options available when purchasing a TPD cover: Any or Own Occupation. Own Occupation policies generally pay a lump-sum benefit if you won’t be able to work in your specific or current occupation ever again.
In contrast, Any occupation pays a lump-sum benefit if you cannot return to work permanently in any occupation you are reasonably suited to by way of training, education, or experience. Typically, two other cut-down definitions of total and permanent disablement are available: home duties and Activities of Daily Living (ADL)/Modified TPD.
Definitions
Any Occupation – Pays a lump sum benefit if you are totally and permanently disabled and it is unlikely that you will ever be able to return to any occupation for which you are reasonably suited to by way of education, training or experience.
Own Occupation TPD – pays a benefit if you are unable to ever work again in your specific or current profession, due to illness or injury. This type of disability insurance is more expensive because it offers more comprehensive coverage and it’s generally easier to satisfy the insurer’s definition that you are totally and permanently disabled.
Home Duties – Provides a benefit if you are unable to continue performing regular home duties, including cleaning the house, preparing meals for the family, doing the laundry, shopping for groceries, and caring for your dependent children.
Modified TPD(Activities of Daily Living) – Covers you if you are unable to perform at least, two of the five activities of daily living:
• Eating and drinking
• Using the toilet.
• Dressing and undressing.
• Showering or bathing.
• Unable to move from your wheelchair or bed or moving without the help of a walking aid or wheelchair.
Combining Life and TPD Insurance
Generally, you have the option to combine Life Insurance, TPD Insurance and Trauma Insurance in one policy. However, checking with your insurance provider is typically a good idea. Combining cover could help save you money and add an extra layer of protection.
However, typically your overall sum insured will reduce when you make a claim on one of your combined policies. For example, if you have a total of $1 million worth of life cover and claim $300,000 for Trauma insurance, you’ll only have a total of $700,000 life cover left.
Life Cover Buy Back
Common TPD insurance exclusions
It’s important to know that disability policies usually contain specific exclusions. Depending on the insurer and the policy you choose, the company may exclude injuries or illnesses that are directly or indirectly the result of:
• Pre-existing medical conditions.
• Intentional self-inflicted injuries and suicide attempts.
• Taking part in a dangerous occupation or pastimes.
• War and hostilities.
• Criminal activities.
• Under the influence of alcohol or drugs
Note: All policies are different. Please read your product disclosure statement (PDS) for a full list of exclusions.