TPD Definitions

What are the main types of TPD definitions available?

TPD cover is generally defined as insurance that pays out a lump sum if you become permanently disabled and are unable to work again. This general definition is further 'qualified' by your insurer, who will have their own definition of TPD. The end result? Often something similar these three main definitions:

  • 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. Because the terms are quite specific and a payout is more likely, this is the most expensive form of TPD insurance.
  • Living expenses / Non working. This ignores 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 (i.e. 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.

Why is it important to understand the definition of TPD?

Top reasons for claim disputes

How total and permanent disability (TPD) is defined in your TPD insurance policy directly affects your chances of receiving a benefit if you claim. And as this guide shows, TPD definitions have undergone gradual changes, particularly inside superannuation, as insurers seek to tighten up the current definitions.

Here's how payout's work under each TPD definition

TPD definitionExtent of disability required for a payout
Any occupation Unable to work in:

  • Your current occupation, or
  • Any occupation you are suited to by education, training and experience
Own occupation
  • Unable to work in your current occupation
Living expenses / Non-working Permanently disabled and unable to:

  • Perform two or more of the five activities of daily living

Infographic: TPD claim criteria Speak to an adviser about TPD cover

How is TPD defined inside a super policy?

When TPD insurance is held inside superannuation, a claim will only be paid if the member satisfies a condition of release in accordance with the Superannuation Industry Supervision (SIS) definition. This is an “any occupation” definition under the Superannuation Industry Supervision Act in which permanent incapacity is considered a condition of release if the member suffers ill health which prevents them from engaging in gainful employment for which they are reasonably qualified by education, training or experience.

Why is this the case?

From July 2014, all new TPD policies within super have been required to be compatible with this condition of release and many of those held prior to this time would be difficult to claim on today due to their non-compliant wording. Own occupation policies in particular would be almost impossible to claim on, which is why they are no longer offered inside superannuation.

Example definition of TPD inside super

A typical TPD policy held inside super uses the following TPD definitions – you are considered totally and permanently disabled if:

  • Criteria 1

Your illness or injury has prevented you from being able to work in any job for at least three months in a row and you are incapable of ever working in any suitable job based on your previous education, training or experience or any job you may reasonably become suited to with further education, training or experience

  • Criteria 2

You have been unemployed for at least six months in a row and your illness or injury has prevented you from doing at least two of five everyday working activities (mobility, communicating, vision, lifting or manual dexterity) without physical help from another person and even with the use of medication and appropriate aids

Note: Exclusions typically apply in such policies where a benefit will not be paid if you increase your level of cover without providing detailed health information or become totally and permanently disabled as a result of harming or attempting to harm yourself (including attempted suicide).

Changes to TPD insurance

As noted in the previous section, the typical definition of TPD is changing from the original SIS “any occupation” definition. This is in the wake of one of Australia’s largest insurers TAL being allowed by AustralianSuper to alter its TPD definition as of November 2014. Its new definition now not only requires you to be unable to work in a job within your education, training and experience, but also to be unable to reasonably retrain or re-skill due to your injury or illness. This tightening of the definition will make it even harder for claimants, particularly those in manual and unskilled jobs who are less suited to retraining in desk jobs, to successfully claim on their TPD insurance and it is thought that most other insurers and super funds will follow suit in changing their TPD definitions now that such a precedent has been set.

Can my superfund change the definition of TPD?

The short answer is yes and many funds may have already done so.

  • If you purchased your TPD cover inside super prior to 1 July 2014, your policy’s TPD definition will be whatever your insurer was using at the time.
  • If you purchased your TPD cover inside super after 1 July 2014, its TPD definition will be the SIS “any occupation” definition.

Examples:

  • If you purchased your TPD cover inside super after November 2014 and you are with Australian Super, your TPD definition now includes retraining and rehabilitation clauses as mentioned in the previous section.
  • Sun Super has now also introduced a five-year claim payout period instead of a lump sum payment and MTAA now requires medical certification of an inability to work in any capacity rather than just in a job within your education, training or experience.

If you purchased your TPD cover inside super before 30 June 2014 and you make a claim, your cover will not be affected by the SIS change of definition. The same also applies if you apply for additional levels of cover and are accepted; if you claim, you will not be affected by this change. However, policies purchased inside super after this time will be subject to the SIS definition and as time goes by, new members of super funds will be subject to whatever new TPD definitions emerge.

Are disability definitions the same for income protection?

Disability definitions are more flexible within income protection (IP) insurance because recognition is given to both total and partial disability. Income protection benefits are also paid in ongoing instalments, rather than the lump sum payment in TPD insurance. The three main IP insurance definitions are:

  • Duties-based definition – you are considered totally disabled and eligible for a benefit if your illness or injury prevents you from performing an income-producing duty and you are not working.
  • Hours-based definition – you are considered partially disabled and eligible for a benefit if because of your illness or injury you are working reduced hours (usually less than 10 a week).
  • Income-based definition – you are considered partially disabled and eligible for a benefit if because of your illness or injury you are earning less than your normal income (i.e. less than 20% in 6 months).

Receive TPD Insurance Quotes

Please enter your full name
Please enter a valid email address
It's important to give us a valid phone number
Gender
Smoker
Date of Birth
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.
By submitting this form, you agree to the finder.com.au privacy policy
Get quotes

Compare TPD insurance quotes from these direct brands

Product details Maximum cover Maximum Entry Age Cooling-off
(days)
NobleOak TPD Insurance
NobleOak TPD Insurance
Get fully underwritten Total and Permanent Disability Insurance that can be customised to fit your occupational situation and financial circumstances. $5,000,000 64 30 Get quoteMore info
Real TPD Insurance
Real TPD Insurance
Optional TPD cover available with Real Family Life Insurance. Get up to $1 million in cover against total and permanent disablements. $1,000,000 64 30 Get quoteMore info

Maurice Thach

An insurance researcher and writer for finder.com.au who loves finding an answer to the question "Am I covered for ________?" Maurice has also completed a Tier 1 Life Insurance and a Tier 2 General Insurance Certification under ASIC's Regulatory Guide 146. This means he can confidently provide general advice for life insurance and non-life insurance products.

Was this content helpful to you? No  Yes

Related Posts

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy.

4 Responses

  1. Default Gravatar
    KevinJuly 17, 2018

    Hi Maurice. I found some of your information regarding TPD some 6 months ago now and found it helpful, I think. I have spoken to several solicitors since and I cant seem to get a straight answer from anyone. hopefully you can help me out. I was involved in a motor vehicle accident some 20 months ago leaving me with a soft tissue injury to the cervical spine and an aggrivation of advanced pre-existing degenerative changes to the spine. I went on work cover for a few months only to be cut of due to their specialists reports saying there is nothing wrong with me and I should return to work.

    I sought some second opinions from specialists my self along with a MRI, my specialists had a completely different opinion to those Work cover so called Medico Legal reports. And in those reports from my specialists one has said (I think his future in mining is in doubt) the other saying (this gentleman would be able to carry out work of a light or even light to moderate nature). This along with not being able to pass a coal board medical does not allow me to continue my normal line of work as a coal mine or T/A. I am currently on income protection and have been since W/cover cut me off some 15 months ago.

    I have put in a TPD claim with C-Bus but was rejected because they went off the W-cover reports. I have a follow up appointment with one of my specialists in August that will back my claim up as nothing has improved. I will be sending it of to C-Bus for them to reconsider their prior decision. I want to also put a TPD claim in with Australian Super once I receive the final report. Qu 1- can I make two claims or do i just go with the higher paying one. I have been told I am not eligible because I can be retrained in another field.

    I have been with A super from 2009 and I am a bit confused as to what policy I come under. Qu2- Do I use the prior policy or do I use the November 2015 as TAL has suggested. Can TAL move the goal posts as they seem fit. some how my TPD coverage since the MVA in 2016 has dropped considerably. Qu3- Do I go off my policy figure at the time of the MVA. Qu4-How long do I have to put a claim in to Australian Super. A lady I spoke to yesterday told me I have 5 yrs but I am a bit sceptical about that because she also told me TAL have not changed anything for 20 yrs.They have sent me a copy of a Group Life Policy saying it is affective from 1 Nov 2015. TAL are at this moment trying to find me a host employer which I am delaying as long as I can while I find out if I should be going of the new or old policy. Your opinion will be greatly appreciated. Thankyou.

    • finder Customer Care
      MauriceJuly 25, 2018Staff

      Hi Kevin,

      Thanks for your question.

      By the sound of it you have a TPD insurance policy inside super. Typically, this means a TPD benefit is not paid out to people who the insurer feels can still get gainful employment for which they are reasonably qualified by education, training or experience.

      If you feel like you’re situation was not fairly assessed then it could be worth seeking legal representation – which is what you have done. Some things you can also do include:

      1. Checking the policy wording
      2. Get medical evidence that’s consistent with your policies TPD definition
      3. Get your work history together

      In terms of claiming on two insurance policies that will depend on your arrangement with the superfund.

      I hope this helps,

      Maurice

  2. Default Gravatar
    KrisJune 7, 2018

    I have received approval for a tpd claim via hostplus. I was of tbe understanding that if I accept the offer of payout of the benefit plus the withdrawal of my super that I can not return to my previous form of employment. However I am able to retrain into another for of employment. Is this true?

    • finder Customer Care
      MauriceJune 8, 2018Staff

      Hi Kris,

      TPD insurance inside super generally covers disabilities where you can’t return to any occupation suited to your training or education – so there could be some limitations on returning to employment if it’s in the same field.

      To be sure – clarify with Hostplus.

      I hope this helps,

      Maurice

Ask a question
Go to site