What Is Tpd Insurance In Australia?

Total and Permanent Disablement Cover (known as TPD Cover) works in a similar fashion to life insurance whereas a lump sum is payable on an event that renders the person insured unable to ever work in an occupation again. The cause of the disablement can be any medical event excluding self-harm or a specific exclusion determined at application by the insurer, and basically includes any medically diagnosed illness or injury. As an example, the majority of claims result from cancers and skeletal injuries [1].

TPD Insurance is designed to cover the financial risk of losing the ability to work along with the increased costs of ongoing care. It is common to insure debts, loss of income and additional capital for possible home alterations and ongoing medical costs. It is also common for the level of TPD Cover required to be higher than that of Life Cover as under Life Insurance there is no need to cover the ongoing expenses of disablement, loss of incomes and ongoing medical care.

There are a number of forms of TPD Cover that can be obtained and each type can dramatically alter the requirements and eligibility for claim. These include;

- Non Occupational TPD Cover - this is a loss of independence style policy and the cheapest available. In order to claim the life insured needs to be unable to independently conduct 2 of 5 listed activities of daily living, for example, bathing or eating. Given the higher severity of disablement required for claim, this style of TPD cover is the cheapest option, however is the most difficult to claim.

-Any Occupation TPD Cover - Any Occupation TPD Cover requires a person to be unable to work in their occupation again or any occupation to which they are suited via education, training or experience. In assessing claims under this definition, the insurer will first assess the person's ability to do their own occupation, and then will assess if that person can do another suited occupation. If it is deemed that a person can do another occupation, then the definition will not be met.

-Own Occupation - Own Occupation TPD Cover requires a person only to be disabled from their occupation. This is the most expensive of the options, however offers the strongest definition and most claim certainty. Should the life insured be unable to work in their occupation but can work in another, this is ignored by the insurer and a claim payment is still made.

TPD entry and expiry ages are slightly more restrictive than Life Insurance. Policies under the ‘own' or ‘any' occupation definition will normally either expire at age 65 or will revert to the ‘non-occupational' style of policy.

There are many options available to insure and the levels and types of cover needed to provide protection for you and your family will differ from person to person. The most common question I get asked is ‘Is there an average or common figure that people get?' There is an average, however your circumstances are not common to the next, as such it is important that your circumstances deem what is necessary not what is the average.

The information provided in this article is general in nature. Before acting on any information given in this article you must consider if it is appropriate for your circumstances, needs and objectives. It is recommended that you seek specific personal financial advice on the appropriateness of the information in this article before proceeding. You should also obtain and consider a Product Disclosure Statement (PDS) before making any decision to acquire a product. This article is intended for Australian Residents only. The views expressed in this publication are solely those of the author; they are not reflective or indicative of Millennium3 Financial Service's position, and are not to be attributed to Millennium3.