Total and Permanent Disability (TPD) Insurance

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Q: What is TPD insurance? TPD insurance provides you with a lump-sum payment if a serious illness or injury stops you from working permanently.

This includes accidents such as the loss of a limb or eyesight or if you're diagnosed with a life-changing illness such as cancer or motor neurone disease (MND).

There are two main types of TPD insurance:

  1. Any occupation. You can no longer work in any jobs suited to your education, training or experience.
  2. Own occupation. You can no longer work in your current job.

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Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount. Calculator
Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
Provides a lump sum payment if you suffer a serious medical condition. Cover can be taken out for 40-60 medical conditions depending on the policy you choose.
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Compare optional TPD cover on Australian life insurance policies

Name Product Maximum cover Maximum Entry Age Expiry Age Optional Cover - TPD Optional Cover - Trauma
$15,000,000
69
99
Yes
Yes
$1,000,000
64
No expiry age as long as premiums are paid
Yes
No
$1,500,000
64
No expiry age as long as premiums are paid
Yes
Yes

Compare up to 4 providers


where-does-my-policy-go

Who offers Total and Permanent Disability in Australia?

In Australia you can either get TPD insurance directly with an insurer, or with the help of an adviser (retail insurers). We've compared TPD insurers based on market share.

InsurerMarket share by annual premium
AIA1.0%
Allianz5.0%
AMP2.8%
ClearView2.5%
CMLA5.3%
Hallmarkn/a
Hannover Re11.1%
HCF2.5%
MetLife0.5%
MLC0.0%
NobleOak6.9%
OnePath3.9%
QBE / Integrityn/a
Qinsuren/a
St Andrews0.2%
Suncorp / Asteron0.5%
Swiss Re46.2%
TAL11.0%
Westpac0.7%
Zurich0.0%
InsurersMarket share by annual premium
AIA7.3%
Allianzn/a
AMP20.1%
ClearView2.1%
CMLA4.8%
Hallmarkn/a
Hannover Ren/a
HCFn/a
MetLife0.1%
MLC12.7%
NobleOak0.1%
OnePath13.9%
QBE / Integrityn/a
Qinsuren/a
St Andrewsn/a
Suncorp / Asteron8.9%
Swiss Ren/a
TAL9.0%
Westpac12.9%
Zurich8.2%

How does total and permanent disability insurance work?

Here's when Total and Permanent Disability Insurance is needed and how it is used.

hand-logo

1. A situation forces you to stop working

Common examples of total and permanent disability can include:

  • Loss of sight
  • Loss of hearing
  • Loss use of limbs (arms or legs)
  • A serious disease
  • Mental illness

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2. Your insurer assesses your claim

A Total Permanent Disability (TPD) benefit is usually payable when:

  • You become totally and permanently disabled due to either injury or illness
  • You aren't at work for a set amount of time
  • There's no expectation of you returning to normal work
  • You meet any other criteria set out in your policy
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3. Receive your benefit payment

In addition to replacing your income you can use your payment to cover:

  • Outstanding debts
  • Ongoing living expenses
  • Medical expenses
  • Home modifications

Who can apply for cover?

Generally, you can apply for total and permanent disability insurance if you are:

  • Between the age of 17 and 64 years old
  • An Australian citizen or permanent resident
  • Residing in Australia at the time of application

Note: your job and health is also assessed when you apply.

Apply for cover now

  • What's covered by TPD?

    As has been mentioned, TPD stands for total and permanent disability, but in what actual situations are covered claim? The answer depends on the type of TPD insurance you have.

    There are four main types of TPD cover available:

    1. Own occupation

    This provides cover if you can't perform your current occupation anymore.

    2. Any occupation

    This provides cover if you can't perform any type of job related to your experience or education anymore. This is harder to prove than own occupation.

    3. Home duties

    This is designed to protect you as a stay-at-home partner in case you can no longer perform home duties e.g. looking after children.

    4. Modified TPD

    This provides cover if you can no longer perform the activities of daily living e.g. showering.

    Own occupation vs any occupation

    Own and any occupation policies are designed to cover disabilities that stop you from working. There are some key differences.

    surgeonLosing a hand as a surgeon

    Situation

    Michael is a surgeon and he has lost the use of one hand.

    • If Michael had an own occupation policy

    Under the definition of own occupation, he would be considered to be permanently disabled as he is unable to continue his practice as a surgeon and therefore, the benefit payment is payable.

    • If Michael had an any occupation policy

    However, under an any occupation definition, it could be argued that despite his inability to continue to practice as a surgeon, he could still work as a general practitioner, denying him his benefit.

    Payout comparison

    Situation
    Cover
    1. You are unable to work at all, in any type of job related to your education/experience.
    • Covered by by Own and Any Occupation.
    2. You can no longer perform the duties of your specific job (but can still physically perform work suited to your education/experience).
    • Covered by 'Own Occupation' policies
    • Not covered by 'Any Occupation' policies

    Which one costs more?

    Own occupation cover will give policyholders greater flexibility but is generally more expensive.

    Both types will require waiting periods

    You'll need to show that your disability is permanent and show a minimum time that you have been out of work (typically 6 months).

    Own vs any occupation: What's the difference?

    Home duties vs modified TPD

    These two policies are aimed to cover disabilities further outside of standard work situations.

    Home dutiesModified TPD
    Who can benefit from this policy?Family members who perform domestic duties in the household.This can cover anyone.
    When does it payout?You no longer can perform unpaid domestic duties in a full-time capacity.You're no longer able to perform two daily living activities without assistance.
    Types of activities you have to show the insurer that you're no longer able to do
    • Maintenance and care of the family home
    • Management of the household
    • Looking after dependent children
    • Cooking and cleaning
    • Repairs and maintenance around the household
    • Bathing or showering
    • Dressing and undressing
    • Eating and drinking
    • Using the toilet for hygiene
    • Getting in or out of a bad/wheelchair

    Who actually needs TPD insurance

    TPD by the numbers: It's a small sacrifice to cover a real possibility

    calculator-icon

    Average cost of TPD Insurance

    $15.29 per month

    Learn more

    australia-icon

    Australians affected by disabilities

    1/5 Australians (4.3 million)1

    out-of-work-icon

    No. of people permanently out of work

    566,700 disability sufferers1

    pay-icon

    Average income for someone who is disabled

    $465 vs $950 for someone without a disability1

    Disabilities in Australia by the numbers

    How did we get these costs?

Get quotes for cover

Five things to check before you buy

When taking out TPD insurance you should look at:

  • The cost of the cover
  • The features and definitions of the policy
  • Any exclusions and restrictions
  • The level of coverage
  • Reputation and customer service of the insurance provider

Compare the claims performance of insurers

How much does TPD Insurance cost?

How much you pay will depend on a bunch of factors including your age, gender, occupation and the definition of TPD you go for. For example: on $500,000 worth of cover, the cost for a male ranged anywhere from $21.42 per month to $55.97 per month.

Average cost of a policy (per month)

We analysed the cost of a 35-year-old-applicant who doesn't smoke for various cover amounts and checked out two different occupation types (white collar and blue collar). Here's what we found:

500,000 coverMaleFemale
Lowest costing policy$21.42 per month$21.19 per month
Medium costing policy$26.89 per month$26.89 per month
Highest costing policy$29.12 per month$29.12 per month
AVERAGE$25.81 per month$25.73 per month
$200,000 coverMaleFemale
Lowest costing policy$10.16 per month$10.03 per month
Medium costing policy$16.86 per month$16.84 per month
Highest costing policy$18.85 per month$18.85 per month
AVERAGE$15.29 per month$15.24 per month
500,000 coverMaleFemale
Lowest costing policy$35.98 per month$31.78 per month
Medium costing policy$40.37 per month$40.37 per month
Highest costing policy$55.97 per month$55.80 per month
AVERAGE$44.11 per month$42.65 per month
$200,000 coverMaleFemale
Lowest costing policy$16.26 per month$15.04 per month
Medium costing policy$23.68 per month$23.68 per month
Highest costing policy$30.64 per month$30.34 per month
AVERAGE$23.53 per month$23.02 per month

Average prices were taken from a sample quote of all policies available on finder.com.au's quoting engine. Details of the quote were for a 35-year-old non-smoker.

Factors that affect the cost of cover

Policy wording and definitions to check

Coverage varies depending on the insurer, so it is essential that you read the Product Disclosure Statement (PDS) closely. Note: Most brands will combine TPD, Trauma Insurance and Life Insurance into one document.

Four crucial features you must check

check-tpd-phone (1)

  • Total disablement benefit This is the benefit that's paid if you are disabled due to an injury or illness and are unable to perform work duties.
  • Partial disability benefit. This is the amount that is payable in the event of partial disablement eg loss of one arm, one leg or sight in one eye.
  • Your choice of own occupation or any occupation definition. You’ll need to weigh up the pros and cons of any vs own occupation cover, eg cost of cover and when a benefit can be claimed.
  • Buy back option. This option is useful if your TPD cover is part of your term life insurance. When a TPD claim is paid, the amount will be deducted from your life cover amount - buy back option will allow you to reinstate that amount.

Additional features that are also important

family-circle-tpd (1)

  • Death benefit. A benefit amount may be payable in the event of your death, even if your TPD cover is a standalone policy.
  • Loss of independence feature. In some cases the lump sum payment available with TPD insurance can convert to a loss of independence payout, based on the insured's ability to care for themselves.
  • Guaranteed future insurability. This feature allows you to increase the coverage of your policy during the important life events, such as marriage, children, or mortgage, without needing to undergo another medical examination, even if your health situation has changed.
  • Indexation benefit. Sum insured will increase annually in line with the Consumer Price Index (CPI) to keep up with inflation.
  • Premium freeze option. Some insurers offer this option in which you can choose to retain your current annual premium under a stepped style when you reach a certain age and it will reduce the insured amount gradually.

Speak to an adviser

Can you get TPD insurance together with other types of insurance?

(e.g. death cover)

Many Australian life insurers offer life insurance (death cover) and let you bundle them with additional types of cover including:

  • Trauma
  • Total and permanent disability insurance
  • Income protection

You can elect to take them out as seperate policies or link the benefit (trauma, TPD and death) amount together.

A linked death with TPD policy will generally work out cheaper than taking out seperate TPD and death policies. However, in the event you need to make a TPD claim, your life benefit will be reduced the amount you claim unless the policy has a buy back option.

Is TPD insurance included in super?

TPD is offered with most default insurance funds

If you get super from your employer you'll likely have some form of insurance. Often, you'll get often get TPD insurance included. Other insurance products that you can obtain through superannuation funds include:

  • Term life insurance, or death cover
  • Income protection insurance

Is it a good idea to get TPD inside super?

There are a few pros and cons of getting TPD inside super.

Pros

  • Often cheaper
  • Premiums are tax-deductible to a limit
  • Automatically deducted premiums so you can 'set and forget'

Cons

  • Eats into your retirement savings
  • Tougher approval process for claims than outside super
  • Own occupation definition unavailable

Structuring your policy

There are two main things you'll need to decide on:

  1. Do you just want TPD cover?
  2. Are you buying cover inside or outside super?

A good way to decide on this is to look at what circumstances you want covered:

Circumstance TPD inside super Standalone TPD TPD + Death cover TPD + Income Protection
1. Disability stops working permanently including jobs related to your experience.
  • Yes
  • Yes
  • Yes
  • Yes
2. Disability stops working permanently from your specific role.
  • No
  • Yes if your policy has an 'own occupation' definition of TPD
  • Yes if your policy has an 'own occupation' definition of TPD
  • Yes if your policy has an 'own occupation' definition of TPD
3. Injury or illness stops you from working for a short period of time.
  • No
  • No
  • No
  • Yes
4. You die.
  • No, unless combined with death cover in super
  • No
  • Yes
  • No unless you add

Income protection vs TPD insurance

While TPD and income protection protects you in the event you're unable to work, they are different. TPD is focused on long-term disabilities, whilst Income Protection is designed for short-term disabilities.

Read this guide

Picture: Getty Images

How much TPD insurance cover do you need?

To calculate how much TPD you require you’ll need to assess your needs:

  • Ongoing expenses and debts. List all the financial commitments your family have currently, from ongoing living expenses, children’s education expenses, bills and debts.
  • Future expenses. Consider any future obligations that your family may have, ie your children’s education costs.
  • Potential medical expenses. Work out how much you’ll need to cover any unexpected costs, such as medical expenses, rehabilitation costs, nursing care and home and/or vehicle modification costs.

Once you have an idea of the expenses and needs of your family, you should also check whether you already have cover through your super (you probably do).

If so, you should ensure that you contact your super fund and get rid of these redundant policies as they will eat into your super savings.

Is TPD tax deductible?

Yes, total and permanent disability insurance benefit payment is tax free. However, your premiums for TPD outside of super are not tax-deductible.

TPD insurance tax guide

TPD insurance premiums are only fully tax-deductible when the policy definition match the conditions of disability super benefit, under any occupation definition. If held under TPD own occupation definition, only a portion of your premiums are tax-deductible, at 67% and 80% when bundled with life insurance cover. Your TPD insurance proceeds may also be subject to tax when held inside superannuation, depending on whether you receive the benefit as a lump sum or monthly payments. Read more on the tax treatment of TPD insurance to get a full understanding.

How do I make a successful claim?

Understand what insurers look for during a claim time.

Definitions of permanent disability vary slightly between insurers, but you usually need to meet the insurers checklist. As a general example, an insurers checklist could look like this:

Checklist for payout Details
Minimum length of disability 6 months due to an injury or illness
Rehabilitation You'll need to seek a sufficient amount of medical treatment and rehab for upwards of 6 months.
Medical certification provided to your insurer. A least one medical practitioner certifies that you are totally and permanently disabled. Some insurers will also get a second opinion from their own medical professionals.
Policy definition You meet the definition total and permanently disabled as set out in a policy. These vary between policies which are generally categorised as any occupation or own occupation. However, some insurers also offer home duties TPD and general TPD policies.

You can read finder's guide on successful TPD insurance claims for a more detailed explanation.

What isn’t covered by a TPD policy?

An exclusion is when an insurance company won’t return a benefit for a TPD claim due to personal factors you didn’t declare prior to your policy, or because of acts that void cover.

Instances include failing to declare pre-existing medical conditions or participating or participating in violence. Here’s a list highlighting circumstances where you won’t receive a payout under your TPD policy.

Insurance exclusions

Frequently asked questions


Compare TPD policies

Sources

2. https://www.and.org.au/pages/disability-statistics.html

3. http://www.health.gov.au/internet/publications/publishing.nsf/Content/mental-pubs-m-mhaust2-toc~mental-pubs-m-mhaust2-hig~mental-pubs-m-mhaust2-hig-pre

Various graphics on this page were provided by Guru, Vitaliy Gorbachev, Bhavik Limbani from the Noun Project.

Photo by delfi de la Rua on Unsplash

Photo by Danielle MacInnes on Unsplash

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4 Responses

  1. Default Gravatar
    JimDecember 16, 2018

    How much on average do lawyers charge for a successful TPD outcome, worth about $200,000?

    • Avatarfinder Customer Care
      MayDecember 20, 2018Staff

      Hi Jim,

      Thanks for getting in touch.

      Not actually sure though how much the lawyers will charge for a successful TPD outcome as that would entirely depend on the level of service they provide. You’d be best to confirm this directly with the lawyer you go with and confirm their up-front legal fees.

      Cheers,
      May

  2. Default Gravatar
    JillJuly 12, 2017

    Can a TPD payout be used to cover medical expenses in a private hospital when the person is in pain and the public waiting list is 18 months long?

    • Default Gravatar
      JonathanJuly 16, 2017

      Hello Jill,

      Thank you for your comment. :)

      Most TPD insurers have a 3-12 months waiting period and pre-existing exclusions set (e.g. suicide or attempted suicide related injury). As long as you have fully disclosed the conditions, meet the waiting period and the “definition” of the cover you took, it may be qualified for a claim as most TPD products are fully underwritten. Meaning, all terms and other “special clauses” should have been agreed on before it was issued to you.

      You may want to speak to your insurer or insurance agent about this matter. Also, you can refer to the Product Disclosure Statement of your actual insurer’s product for details.

      Hope this helps.

      Cheers,
      Jonathan

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