No longer working and after Total and Permanent Disablement Insurance? Compare quotes and apply.
Typically TPD insurance policies payout if you're disabled to the extent of being unable to work. Non-working and modified TPD insurance expands the payout conditions to include other criteria, so it can still payout if you are not working.
Is a non-working policy right for if I'm a homemaker?
If you are not working a specific income-earning occupation, such as if you're a homemaker or have retired before this age, then a non-working policy or a 'home duties' policy may be suitable.
What if I currently work?
At a specified age limit (usually around 70) some TPD policies will automatically convert to a "non-working" TPD policy, changing the payout conditions from being based on occupation to being specific types of injury, or an inability to perform daily living tasks.
There are four main types of TPD insurance taken out in Australia, each of which has its own unique benefits and disadvantages:
If you are 'working'
- Any Occupation. Under an Any Occupation definition of total and permanent disablement, you are eligible for cover if as a result of your disability you are unable to hold down employment in any job. Premiums under for Any Occupation TPD insurance are lower than Own Occupation because you generally have to be unable to work any job in order to make a claim.
- Own Occupation. A TPD policy with this definition means you’ll be eligible for a benefit payment if your disability means you are no longer able to work in your own occupation, or in an occupation which you are trained for or qualified to work in. Own Occupation TPD is the more expensive and comprehensive form of insurance because policyholders may still be able to claim benefits even if they are able to work in another occupation.
If you stay at home or no longer work ('Non-working')
- Home Duties. This policy type is designed specifically for homemakers and offers cover for people for whom domestic duties are generally their full-time activity. Even if homemakers do not earn a salary, they still perform a host of vital duties in and around the home and to assist the rest of the family. Under a Home Duties definition, if you’re no longer able to perform your regular domestic work you may receive a benefits. This type of cover can help with things such as home maintenance, childcare and the cleaning and cooking.
- Non-working TPD. This option is generally not available when you first take out TPD cover but then becomes available when you reach a certain age. However, most working TPD policies will convert to this definition on your 65th or 70th birthday. Under this definition, you will be eligible to receive a partial benefit if you lose your ability to perform a specified number of daily living tasks or suffer other specific injuries. Activities of daily living include dressing, eating and drinking, bathing, using the toilet, or getting out of bed, or being able to move around independently.
- This essentially a 'working' TPD policy where you add features of a 'non-working' policy.
How does non-working TPD insurance work?
The vast majority of TPD insurance policies will convert to 'non-working' TPD insurance policies once you reach a certain age limit. Depending on the policy, this is typically age 65, 70 or 75.
Because you're probably not working the same job anymore at this age, your TPD definitions change. These definitions specify what kind of disability you need to have in order for a policy to payout. These may vary between policies, but will generally include either one or both of the following:
1. The insured person suffers the total and permanent loss of:
- Two limbs
- The sight in both eyes
- One limb and the sight in one eye.
- Intellectual capacity, requiring care and supervision
2. The insured person is unable to perform a specified number of activities of daily living.
These activities include:
These are specific daily living tasks. If you are unable to do these at all, or without assistance, then you may qualify as disabled under the terms of your policy. The five activities usually specified include:
- Dressing and undressing
- Bathing or showering
- Eating and drinking
- Using a bathroom
- Moving around by walking, with a walking aid or in a wheelchair
Different policies may specify different levels of inability you need to meet before they will pay out. Typically, you will need to be unable to do at least two of these five, while others might specify more, or have variations in the precise definitions of daily living activities.
What is modified TPD insurance?
This option may be available with a range of different policies. It extends the definition of your TPD insurance cover to pay out in the event of specific losses, regardless of whether or not you are unable to work, and regardless of whether you are unable to meet the "activities of daily living" definitions.
The specific payout conditions it may add to your policy can include features that may be found in a non-working TPD policy:
- Loss of limbs
- Loss of cognitive function
- Loss of independent existence
Sometimes, a non-working TPD policy may add these, or similar, payout conditions to a policy after you reach the non-working TPD age. By selecting a modified TPD option with an insurance policy you may be able to access additional payout terms before reaching the non-working age limit.
When can I make a TPD insurance claim?
You are able to make a claim when you meet the specific definitions of disability in your policy. This is why it's important to read through your policy in detail. Some factors that can affect your ability to claim can include:
- What type of TPD cover you have
- How old you are
- Whether it has converted to a non-working TPD insurance policy
Martha's car accident
Martha was unfortunate enough to get in a car accident while driving home one night. She was 71 years old at the time, and last year her TPD insurance policy had converted into a non-working TPD policy. After consultation with her doctor, it became clear that she was unlikely to recover full use of her arms again. She still had some movement, but had lost a lot of strength. If this accident had happened two years ago, when she had an "own occupation" TPD policy it would have paid out because she was no longer able to continue doing her previous job which required her to have strong arms (she was a lumberjack).
Requirements of Martha's policy
However, now that it had been converted into a "non-working TPD policy" the requirements were higher. Going down the terms of her non-working TPD insurance policy, she saw that it would now only pay out for:
- The loss of two limbs
- The loss of sight in both eyes
- The loss of one limb, and sight in one eye
- An inability to perform at least two activities of daily living
Daily activity requirements
Her eyes were still fine, which immediately ruled out the loss of sight claims. She initially thought she might be able to claim for "loss of two limbs", as her arms were badly injured, but they still had movement and some strength, and so didn't qualify as lost. As such, she started looking at the "activities of daily living" criteria.
On her policy, these were:
- Bathing and/or showering
- Dressing and undressing
- Eating and drinking
- Maintaining personal hygiene
- Moving from place to place by walking, wheelchair or with the assistance of a walking aid
- Getting in and out of bed
Did Martha receive a payment?
In order to qualify for a TPD claim, she needed to be unable to perform at least two of these activities without assistance. Going through the list:
- She could no longer shower, but could still bathe by herself. She did not qualify for the this.
- Her arms no longer had enough strength or flexibility for her to dress herself. She did qualify for this.
- She was still able to eat and drink by herself, and did not qualify for this activity.
- She could still use a bathroom without assistance, and therefore was still able to maintain personal hygiene and did not qualify here.
- Martha was still able to move around albeit not as quickly as she used to. She did not qualify for this.
- She could not get in and out of bed without assistance. She didn't have the core strength to sit up without using her arms, and her arms were no longer up to the task. She did qualify for this.
In order to make a TPD claim, she only had two qualify for two of these. On these grounds, she was able to claim a payout, and used it to hire a personal carer.
What are the benefits of TPD insurance?
Life is unpredictable, and unfortunately disasters can happen at any time. Having some form of total and permanent disablement insurance in place offers peace of mind and financial security for you and your family. If serious illness or injury strike and keep you out of the workforce, you can rest assured knowing that your family will be in a position to adjust to the loss of your income.
You can use a TPD payment to pay off your mortgage or manage other debts, or could spread it out to cover regular ongoing expenses over a period of time. It can also improve your quality of life post-disability by paying for modifications to your home or car and medical treatment which might otherwise be out of reach. TPD policies typically pay out a lump sum so you might put the bulk into useful investments, spend what's needed on replacement income and medical expenses and then take a family holiday to help put the traumatic time behind you. There are many benefits to taking out TPD cover, so get quotes and compare your options to find the right policy for you.