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TPD insurance
Total and permanent disability (TPD) insurance can help cover the costs of loan repayments, bills & rehabilitation.
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Total and permanent disability (TPD) insurance protects you if you become permanently disabled and can no longer work.
While income protection insurance provides you with a sustained income if you're unable to work due to illness or injury, TPD insurance comes in the form of a lump sum payment, helping you take care of any debt you have as well as any immediate medical expenses.
Compare TPD insurance in Australian life insurance policies
You can take TPD out as a stand-alone product or as a bundle as part of a life insurance policy.
What is TPD insurance?
You pay your insurer a monthly or annual fee and in return, receive one large payment from it if you become permanently disabled and are unable to work. There are two main types of TPD insurance:
- Any occupation: You can no longer work in any jobs suited to your education, training or experience.
- Own occupation: You can no longer work in your current job.
If you take out "any occupation" TPD cover, you get a payout if you can no longer return to any form of work related to your experience. "Own occupation" TPD insurance pays a lump sum if you can no longer return to your usual occupation.
Here's when TPD insurance is needed and how it is used:
1. A situation forces you to stop working.
Common examples include loss of sight or hearing and mental illness.
2. Your insurer assesses your claim.
It'll look at your injury or illness and confirm that you can't return to work.
3. Receive your benefit payment.
In addiction to your income, payment can help towards debt and medical expenses.
How much does TPD insurance cost?
The average cost of TPD insurance is $15.29* per month. However, the fee you pay will depend on factors such as your age, gender, occupation, lifestyle choices and health. If you're a "blue collar worker", your premiums are typically a little more than "white collar workers" because your job generally involves more risk. Similarly, women typically qualify for lower premiums because they live longer than men.
TPD insurance costs will also depend on how big a TPD benefit you need. For instance, someone looking for a $500,000 lump sum will pay a larger fee (premium) than someone with a $200,000 payout agreement.
| $500,000 cover | Male | Female |
|---|---|---|
| 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 cover | Male | Female |
|---|---|---|
| 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 cover | Male | Female |
|---|---|---|
| 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 cover | Male | Female |
|---|---|---|
| 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
*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.
Who offers TPD insurance 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.
| Direct insurers | Market share by annual premium | Retail insurers | Market share by annual premium |
|---|---|---|---|
| AIA | 1.0% | AIA | 7.3% |
| Allianz | 5.0% | Allianz | n/a |
| AMP | 2.8% | AMP | 20.1% |
| ClearView | 2.5% | ClearView | 2.1% |
| CMLA | 5.3% | CMLA | 4.8% |
| Hallmark | n/a | Hallmark | n/a |
| Hannover Re | 11.1% | Hannover Re | n/a |
| HCF | 2.5% | HCF | n/a |
| MetLife | 0.5% | MetLife | 0.1% |
| MLC | 0.0% | MLC | 12.7% |
| NobleOak | 6.9% | NobleOak | 0.1% |
| OnePath | 3.9% | OnePath | 13.9% |
| QBE / Integrity | n/a | QBE / Integrity | n/a |
| Qinsure | n/a | Qinsure | n/a |
| St Andrews | 0.2% | St Andrews | n/a |
| Suncorp / Asteron | 0.5% | Suncorp / Asteron | 8.9% |
| Swiss Re | 46.2% | Swiss Re | n/a |
| TAL | 11.0% | TAL | 9.0% |
| Westpac | 0.7% | Westpac | 12.9% |
| Zurich | 0.0% | Zurich | 8.2% |
TPD insurance benefits
Some TPD insurance benefits and features you should be aware of and might want to include:
- Total disablement benefit. This is the benefit that's paid if you're 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 e.g. loss of one arm, one leg or sight in one eye.
- Buyback option. If your TPD cover is part of your life insurance, when a TPD claim is paid, the amount will be deducted from your life cover amount – a buyback option lets you reinstate that amount.
- 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 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. This option allows you to 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.
TPD insurance inside super
TPD cover is sometimes included in the superannuation you receive from your employer. However, there are a few pros and cons of getting TPD insurance inside super.
Pros
- It's often cheaper
- Premiums are tax-deductible up to a limit
- Automatically deducted premiums so you can "set and forget"
Cons
- It eats into your retirement savings
- Tougher approval process for claims
- You can't get "own occupation" cover
- It's often poor value for money
Is TPD insurance included in super?
Yes, it often is. However, it's not available with every super fund so it depends on which one your employer uses. If you want to check the level of cover provided by your super fund, you can look at your member statement or contact your super fund directly.
While TPD insurance inside super is usually cheaper than standalone TPD cover, you often get what you pay for. TPD cover inside super can't tailor a policy to your personal needs so it more than likely won't be able to cover all outstanding debts if you do become permanently disabled.
TPD definitions
TPD is defined as being totally and permanently disabled and unable to work as a result. Insurers further define their interpretation of TPD inside insurance policies. These definitions impact when a TPD claim will be paid out. The different definitions of TPD are as follows:
Any occupation.
This pays a lump sum if you become permanently disabled and are unable to work in your own occupation or any occupation to which you are suited by education, training or experience.
Own occupation.
This pays a lump sum if you become permanently disabled and are unable to work in your own occupation. This is the most expensive form of TPD insurance because the terms are very specific and a payout is more likely.
Activities of daily living
This ignores your occupation and pays a lump sum if you become permanently disabled and are unable to independently conduct two or more of the five listed Activities of Daily Living (e.g. eating, bathing, dressing etc.) Given that you would have to be severely disabled to qualify, this is the hardest form of TPD insurance to claim on.
TPD insurance tips
When taking out TPD insurance and calculating the cover you need, you should consider:
- Your debts. If you have a mortgage, loan or any debt, you need to factor that into the amount of TPD cover you need.
- Your level of health insurance. If your health insurance won't cover all the medical bills should you become permanently disabled, factor the costs into your TPD coverage.
- Your super fund. If you have TPD insurance inside super, you might be able to receive a small payout through your super as well.
- Family assistance. If you or your partner become disabled, who will take care of the home duties? You might need to consider budgeting for family assistance.
- The level of coverage you want. Are you willing to sell your home and move somewhere cheaper? If not, then you want enough coverage to pay for all your debt repayments.
FAQs
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Ask an Expert
How much on average do lawyers charge for a successful TPD outcome, worth about $200,000?
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
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?
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