Total and Permanent Disability Insurance

If you can't ever work again, it doesn't mean your bills go away.

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Q: What is TPD insurance? Total and permanent and disability insurance (TPD) covers you in the event where a disability stops you from working again.

This could include accidents (where you lose a limb, lose your eye-sight, etc) or if you become diagnosed with a life-changing illness such as Motor Neurone Disease.

There are two definitions of TPD which insurers cover.

  1. Any occupation. Pays out if you can no longer work in any type of job suited to your education, training or experience (due to disability).
  2. Own occupation. Pays out if you can no longer work in your current job (due to disability)

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Rates last updated September 23rd, 2018
Name Product Maximum cover Maximum Entry Age Expiry Age Short Description
Get fully underwritten Total and Permanent Disability Insurance that can be customised to fit your occupational situation and financial circumstances.
No expiry age as long as premiums are paid
Optional TPD cover available with Real Family Life Insurance. Get up to $1 million in cover against total and permanent disablements.

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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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Why get TPD? Types of TPD How to compare? Death and TPD cover Making a claim

Why do people choose to cover TPD?

Three key reasons why people opt for TPD cover include:

  • Financial assistance for a range of expenses. A TPD benefit can be used to cover your mortgage repayments, pay for medical expenses that have arisen as a result of your disability, and provide ongoing financial support for your family.

  • Cover for specific occupations. Policies have the option to cover specific if you can no longer perform the duties of your regular job (as opposed to a standard requirement where you prove that you can't work in any job).

  • It forms a comprehensive insurance plan. TPD cover can also be purchased as an add-on to life insurance, trauma insurance and income protection cover to give you comprehensive cover.

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


Average cost of TPD Insurance

$15.29 per month

Learn more


Australians affected by disabilities

1/5 Australians (4.3 million)


No. of people permanently out of work

566,700 disability sufferers1


Average income for someone who is disabled

$465 vs $965 for someone without a disability

How did we get these costs?


How does total and permanent disability insurance work?

Here's how a TPD policy works in 3 steps:


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 that stops you from working
  • A debilitating mental illness (some insurers may exclude this)


2. The insurer decides if you are permanently disabled

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

3. You are then paid a sum to use however you like

You can use a payout on expenses such as:

  • Outstanding debts
  • The ongoing cost of living
  • Income replacement
  • Medical expenses not covered by health insurance
  • Home modifications or life style

Common questions around TPD insurance

Example of when a policy would payout

A permanent disability is defined differently by each insurer, but you usually need to meet this type of criteria:

Who can apply for cover?

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

  • Between the age of 17 and 59 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.

How to do I apply?

The best way to start applying is by comparing quotes from a range of insurers. You can get a better understanding of how to apply here.

What types of TPD cover are available?

There are four main types of TPD cover available:

  • Own occupation
    • This provides cover if you can't perform your current occupation anymore.
  • Any occupation
    • This provides cover if you can't perform any type of job related to your experience or education anymore.

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.

surgeonMichael's TPD decision


Michael is a surgeon and he 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 of his inability to continue to practice as a surgeon, he could still use his medical expertise and work as a lecturer or hospital administrator.

Payout comparison

1. You are unable to work at all, in any type of occupation / job / role.
  • Covered by both policies
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

Some other requirements for payment for both policies

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).

Which one costs more?

Own occupation cover will give policyholders greater flexibility but is generally more expensive and only available to certain occupations.

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 duties Modified TPD
Who is this policy for? 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

What should I look for in a TPD policy?

Some of the factors that you have to look into when you are comparing TPD insurance plans include:

  • 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

What features should I pay attention to?

Different insurers will offer a different range of built-in benefits and additional options so it is essential that you read the Product Disclosure Statement (PDS) closely. Note: Most brands will combine TPD, Trauma Insurance and Life Insurance's 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 thats payable in the event of partial disablement e.g. loss of one arm, one leg, or sight in one eye.
  • Your choice of 'own occupation' or 'any occupation' definition. Compare the various definitions of total and permanent disability as not all insurance policies will define them the same way. From there, you can choose a definition of own occupation or any occupation that suits your personal circumstances best.
  • 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.

Prefer to have someone find you a policy with the right features?

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How much TPD insurance cover do I need?

The amount of cover required can vary drastically between people, as they will have different needs and circumstances, so it is important to consider your future needs to determine the appropriate level of cover.

1. 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, i.e. your children’s higher education costs.
  • Potential medical expenses. Determine the sum to cover any unexpected costs, such as medical expenses, rehabilitation costs, nursing care and home and/or vehicle modification costs.
  • Gather a total. Calculate the total costs of all of your commitments.
  • Consider your families needs. Take into account your partner’s age, his/her capacity to earn an income, the number of children that you have and their respective age, to determine how long you may want to cover your family’s needs for.
  • How much do you earn? Think about your current income and what your financial position will be the future. For example, your wage could increase in the future. This will need to be replaced in the event of a disability.

2. Look at your current backup finances and plans

  • Do you have any existing insurance policies. Consider your level of private insurance and if have any insurance in your Superannuation fund.
  • Do you have any assets or shares? This is how much you have in your name including properties and investments.
  • Do you have any cash reserves? Check your savings accounts.

How much will TPD Insurance cost?

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:

50,0000 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
50,0000 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's quoting engine. Details of the quote were for a 35 year old non-smoker.

Factors that affect the cost of cover

As with any form of insurance, the cost of your total and permanent disability policy premiums depends on the level of risk you carry. This assessment varies between providers but some indicators of risk that are generally used include:

TPD Insurance vs Income Protection

TPD insurance is similar to income protection insurance: you are financially taken care of if you are unable to work due to an illness or injury.

There however some differences:

TPD Insurance
Income Protection Insurance
  • What's covered
Permanent disabilities Short and medium term disabilities
  • Payment type
A lump sum payment An ongoing monthly benefit to serve as a replacement income for a specified benefit period

Learn more: The key differences

TPD vs Trauma Insurance?

Both policies payout a lump sum payment. The key difference is what events are covered.

TPD Insurance
Trauma Insurance
  • Events covered
You suffer a serious injury or illness and you are disabled and it's unlikely that you will ever work again. You suffer a critical illness e.g. a heart attack
  • Maximum sum insured
Larger maximum sum insured, usually up to $10m Maximum sum insured is less than TPD, usually up to $5m
  • How am I paid out on claims?
Lump sum Lump sum
  • What features are included?
Inflation protection, partial disability benefit, premium freeze, double TPD benefit Inflation protection, death benefit, premium freeze, double trauma benefit
  • Is it available though super?
Yes No

Learn more: TPD vs Trauma Insurance

Who offers TPD together with death cover?

Many Australian life insurers offer life insurance (death cover) bundle with trauma and total and permanent disability insurance policy these days, either as separate policies or linked cover.

'Linked' cover: A cheaper way to combine cover (but it comes at a cost)

You have the option to reduce the cost of your TPD insurance by linking it to your existing term life policy.

Some policies will cancel if a TPD benefit pays

For insurers who offer 'linked cover', the sum insured may be payable only once to cover either a permanent disability or death. This means, if a TPD benefit is paid, the policy may be cancelled and no life insurance benefit is payable when the insured dies.

Or it will eat into the life insurance benefit

For example, you have taken out a term life benefit of $500,000 and this policy is linked to a TPD policy with also $500,000. If you claim on your TPD cover, your life cover policy benefit will be reduced to $0, which means in the event of your death, no death benefit is payable. However, if you insure a death benefit amount that is a larger sum than the TPD - $700,000 instead of $500,000, you will be left with $200,000 in benefit once you claim on your TPD cover.

Buy back options

On the other hand, some insurers also offer a feature (for an additional premium) called 'Buy Back'. Under this feature, when you claim for a benefit payment as a result of a total and permanent disability, you have the option to re-purchase the amount that has been deducted from your term life policy and continue your life cover. This feature is generally not available for TPD policies that are standalone or linked under a trauma cover.

Learn more: Buy back options

Can I get TPD through my super?

You can obtain TPD insurance policy through your superannuation.

This means your policy is owned by a trustee of an eligible super fund and you are a contributing member of that fund. Your contributions will be used by your trustee to pay your insurance policy premiums and in this situation these premiums are often tax deductible.

TPD can also be taken out through a self managed super fund (SMSF), and if you are a member of more than one super fund, you can have your TPD insurance provided by one fund, and use the other to accumulate funds for your retirement. Other insurance products that you can obtain through superannuation funds include:

  • Term life insurance, or death cover
  • Income protection insurance
  • Critical illness insurance, or trauma insurance

Advantages and disadvantages of TPD through super

You can only obtain TPD insurance through your super fund if the fund also provides you with death cover. If you are thinking of obtaining your total and permanent disability insurance through your superannuation fund or SMSF, there are some advantages and disadvantages that you need to be aware of.

Tax deductible premiums
  • If you have your TPD insurance under your superannuation, the premiums are paid from your tax-deductible contributions to the fund, or from employer contributions. Outside of your super fund, there are no tax deductions allowed for total and permanent disablement cover.
Insurance premiums can eat into your investments and retirement funds
  • The cost of your TPD insurance is included in the superannuation contribution cap. This means, the more insurance you have, the less funds are available for investments and when you retire.
Salary sacrifice
  • You can nominate a smaller take-home income amount so you can take advantage of the low tax income bracket and have your employer directly contribute to your super fund, and in turn your insurance.
Benefits are paid to your trustee.
  • When a successful insurance claim is paid, it is paid to the trustee of the super fund and only they can release the benefits if you meet the conditions of release. The trustee can then use beneficiary nominations, your Will or their own discretion to determine who will receive the benefits.
Personal and government contributions
  • Policyholders are still eligible to receive government co-contributions while making their own contribution to their super fund.
'Own' occupation TPD insurance can be limited
  • Your trustee may be unable to claim a tax deduction for your premiums or you may not be able to get access to your benefit immediately unless you meet other conditions of release, such as reaching preservation age, declaring permanent retirement or turning 65.
Benefits can be tax free
  • Death benefits paid from your super fund managed insurance policy are tax free when paid to the beneficiaries of your policy. A portion of TPD benefits can also be tax-free.
TPD benefits are tax free outside of superannuation
  • If you are considering running your insurance through your super fund to save on tax, benefits paid for total and permanent disability insurance claims are usually tax free outside of superannuation.
Increased cash flow
  • You don't have to worry about finding money each month for your insurance premiums because they are paid in your pre-tax dollars. This also means there is less chance of your policy lapsing and you being uninsured.

You may find that you are already covered with TPD, including death and income protection insurance, through your employer’s nominated super fund. So, it is important to review your current TPD cover inside superannuation and determine whether the current cover is enough to match your needs and situation.

Is TPD tax deductible?

Yes, total and permanent disability insurance benefit payment is tax-deductible. However, the premiums you pay for TPD insurance is generally not tax-deductible.

TPD Insurance through Superannuation and Tax

When held inside superannuation, the tax treatment for TPD insurance premiums will vary depending on:

  • whether or not the policy meets the definition of a “disability super benefit” condition
  • whether it is an own or any occupation TPD policy
  • if it is bundled with life cover.

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?

To ensure success in claiming your TPD insurance benefit, it is important to have a clear understanding on the terms and conditions of submitting a claim with your insurance provider. Key conditions include:

  • Understanding the difference between own or any occupation: It is crucial for the policyholder to have a clear understanding of their policy definition. Remember that a total disability benefit is only payable when the policyholder has satisfied the condition of their policy.
  • Inability to perform your occupation for at least six months: You will also be required to provide proof that you are unable to perform the duties of your primary occupation for six months before turning 65 years old.
  • Partial disability benefit: You can still receive a benefit payment even if you are partially disabled and able to work in your own occupation at reduced hours. For the benefit to be payable, you must meet the requirements of a partial disability, which may be hours or duties based, or permanent loss of use of one arm, leg, or vision. Your condition must also be certified by an approved medical practitioner.

You can read finder's guide on successful TPD insurance claims for a more detailed insight into the process.

Can I go back to work, even after making a successful claim?

It is possible in certain circumstances to return to work after being paid out on a TPD (Total and Permanent Disability) claim. This will depend on the policy type:

  • Own occupation policy. If your disability is such that you cannot perform your chosen occupation and you have taken out a policy that specifies the inability to perform your ‘own’ occupation (rather than ‘any’ occupation), then you will more than likely be paid out in a lump sum. If in the future, you are then able to perform some sort of work other than your chosen occupation, there is nothing to prevent you from doing so.
  • Any occupation policy. On the other hand you take out TPD cover that specifies the inability to perform ‘any’ occupation, then it will be more difficult for you to qualify for a payout and if you do, it will mean your disability is truly total and permanent and you will thus be unlikely to return to the workforce. For this reason, TPD insurance specifying ‘own’ occupation is more expensive and is only available for certain occupations.

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.

  • If you don’t declare your pre-existing medical condition. You won’t be covered by a TPD policy if you show symptoms or seek medical advice, and there are signs showing you were already suffering a pre-existing condition.
  • What about if you become unemployed and didn’t declare your condition? If you find yourself out of work because of an injury that happened prior to your policy, you won’t receive a benefit.
  • Committing self-inflicted and harmful acts. If you try to commit suicide or cause self-harm and become disabled, you won’t be covered.
  • Failure to seek timely diagnosis or treatment. If you ignore your own personal duty to seek medical attention or advice when required, you will void your policy.
  • A Congenital condition. You won’t receive a benefit if an insured individual or child is found to have suffered a birth defect or anomaly, leading to a disability.
  • if you’re pregnant. You won’t receive benefits unless you see out a set waiting period to prove you’re temporarily or permanently disabled. This also applies to a miscarriage. Industry standards see most insurers offering a 9 month waiting period before benefits are paid.
  • If you live a dangerous lifestyle. Your claim could be knocked-back if you’re found to have put yourself directly or indirectly in danger. This could be a result of extreme sport accidents like base jumping.
  • If you’re guilty of a crime. Your insurer will reject any claim you make for a benefit. You are not covered for time behind bars.
  • An Act of War. This includes participating in violence, or planning harmful attacks, regardless of whether war has been declared.

Frequently asked questions

Total and permanent disability insurance is an important accessory to have in your life insurance arsenal. TPD insurance is relevant for singles, couples and families because even if you don't have any dependents, how are you going to find the means to look after yourself and pay your medical bills if you are unable to work because of illness or injury? If you do have a family relying on your income, think about how their lives would be impacted if they had to find other sources of income, not to mention the resources to look after you.

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

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Photo by Danielle MacInnes on Unsplash

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2 Responses

  1. 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.


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