How is Own Occupation disability insurance defined by insurers?
Own Occupation TPD Insurance provides a benefit payment if the policyholder is unable to work again in their current occupation. Some policies will also include the policyholders occupation at the time of application in this category. Under this definition, the policyholder is unable to perform the duties of their occupation that they were trained to perform.
Who needs Own Occupation TPD insurance?
People that are trained in specific occupations generally use own-occupation policies.
What's the benefit of this type of cover?
While the person may not be able to continue in their current occupation that they are qualified for, they are still entitled to receive the own-occupation benefit payment if they are able to work in another occupation that does not require the same qualifications. Generally speaking, the premiums for own occupation TPD policies are much higher than that of Any Occupation TPD as it is much easier to meet an own occupation definition.
Should I take cover inside or outside of super?
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How is TPD Any-Occupation Different?
Under an Any Occupation definition, the policy owner has become disabled and is unable to perform the duties of any occupation that they may be suitable for following training or education. Essentially, in order for a benefit to be paid the workers disablement will mean that they are never to be able to return to the workforce.
Is Own Occupation TPD inside super tax deductible?
Premium payments are tax deductible. However since July 1, 2014 Own Occupation TPD Insurance is no longer available inside of superannuation.
Is Own Occupation Disability Insurance outside of super tax deductible?
Own Occupation Disability Insurance funded outside of superannuation unfortunately is not tax deductible though the benefit payment is generally deductible if paid to the insured person.
What are the benefits of Own Occupation TPD outside of super?
While policyholders may not be able to take advantage of premium tax benefits, there are other reasons why holding your TPD outside of your superannuation may be a more suitable option.
- In comparison to TPD funded through superannuation where the fund trustee must first approve the benefit payment, policy owners are paid their benefit payments immediately following a successful claim.
- If your TPD is funded through your super and you change employers you may need to apply for a new policy and go through another round of medical underwriting. This will not be an issue if cover is funded outside of super and you change employers.
- TPD benefit payments will not be subject to tax.
- Applicants can qualify for the “Own Occupation” definition of cover.
Are Own Occupation Disability policies more expensive?
As “Own Occupation” is a more liberal definition of disability given claimants may still be able to work in another occupation to receive a benefit, this type of cover is generally more expensive. Insurance companies are now placing greater restrictions around what applicants are eligible to receive this type of cover to account for a risk of increase in claims. Acceptance for “Own Occupation” cover may be dependent on the applicant's medical history and whether or not they work in a high-risk profession.
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