Life Insurance Comparisons

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TPD Insurance

 

In Australia, TPD Insurance is short for Total & Permanent Disability Insurance.

 

If you choose to have TPD Insurance added to your life insurance policy, this will provide a lump sum benefit to you in the event of a Total and Permanent Disability. The insurance claim proceeds can be used to clear any debts and/or make alterations with your life going forward. This ensures that you are not forced to sell your home or other assets at 'fire sale' prices if the bank calls in the loan.

How Does TPD Insurance Work?

For most life insurance companies, a total and permanent disability insurance definition will pay in the event of Loss of Limbs or Sight, Unable to Work or Unable to Perform Daily Living Activities. Generally you must be considered 'never to be able to work again' and is permanent in nature. This is NOT the same as Income Protection. There are specific circumstances for this payment and it is paid as a once off lump sum. Always read the appropriate Product Disclosure Statement for exact definitions. 

TPD Insurance Definitions

There are three main types of TPD insurance definitions in Australia.


1. Any occupation
2. Own occupation
3. Home-maker occupation

The 'Any' occupation is often included as part of your superannuation fund, but this is a very strict definition. Most policies will only pay a claim if "you are considered (by two medical professionals) to never be able to work again in any occupation for which you are reasonably qualified for by training education or experience".


The 'Own' occupation definition is a better definition (and slightly more expensive) because its definition states that if "you are considered (by two medical professionals) to never be able to work again in your own occupation for which you are reasonably qualified for by training education or experience". This is a much better definition because you may qualify for a claim even if you can work in a very different role (such as answering phones etc..)


The 'Home-maker' definition is only applicable for people who are  at home performing normal domestic duties. A claim is paid if the insured has suffered an illness or injury where they are unable to perform normal domestic duties, leave home unaided and requires ongoing medical care.

Saving you money!

By getting the right advice and therefore the right life insurance and TPD Insurance policy, you won't end up paying premiums for many years to find that you had the wrong policy. It is wise to chat with an adviser about the wording behind the permanent disability definition before acquiring a product.