Life Insurance with TPD Cover

Thinking of getting life insurance? Consider getting TPD cover too.

If you are looking for insurance that will give you a complete peace of mind, then it makes sense to get cover for more than just death. Life insurance and total and permanent disability (TPD) insurance protect you against two of life’s most devastating possibilities:

  • An untimely death
  • A total and permanent disablement through illness or injury
  • Terminal illness

In Australia, there are a number of providers that will now offer bundled cover for Total and Permanent Disablement and Partial Disablement as an additional option on the Life Cover plan.

Compare TPD cover options with life insurance

Rates last updated June 19th, 2019
Name Product Maximum cover Maximum Entry Age Expiry Age Short Description
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.
Get fully underwritten Total and Permanent Disability Insurance that can be customised to fit your occupational situation and financial circumstances.

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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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How does life and TPD insurance work together?

Life and TPD insurance provides your beneficiaries with a lump sum payout if you die or are diagnosed with a terminal illness (12 months or less to live). It also provides you and your family with a lump sum payment if you can’t work because you are totally and permanently disabled (the definition of disabled varies between insurers).

Events which are covered

PolicyYou can no longer work because you become totally and permanently disabledYou dieYou are diagnosed as terminally ill
Life and TPD
  • Covered (Lump sum payment to you)
  • Covered (Lump sum to your beneficiaries)
  • Covered (Lump sum to you and your beneficiaries)
Death-only cover
  • Not covered
  • Covered (Lump sum to your beneficiaries)
  • Not covered
TPD-only cover
  • Covered (Lump sum payment to you)
  • Not covered
  • Not covered

What's the benefit of having cover in place for both Life and TPD

A key reason to consider bundling TPD and Life Cover is the reality that the likelihood of the policy applicant dying can increase following total and permanent disablement. This could occur if the policy owner is involved in a serious accident, is unable to make a full recovery and passes away within a short period of time.

A report from Rice Warner showed that a non-smoking male 40 years of age was roughly 20 times more likely to pass away in the following year following suffering Total and Permanent Disablement.

By comparison, an applicant may be involved in a similar accident and become a paraplegic but is still able to live long into their retirement years.

Why should I receive quotes for life and TPD together?

Bundling different types of cover under a single policy can be a convenient way for policyholders to:

  • Receive the right amount of protection and
  • Not have to worry about managing multiple policies terms
  • Not have to worry about managing multiple payments

When would I need Life or TPD insurance?

Life and TPD insurance provides cover for two very real risks: the risk that you might die and leave your loved ones unprotected and the risk that you could suffer an illness or injury and be unable to support them financially.

You may need death insurance if you have any of the following:

  • Dependent children
  • A dependent partner
  • A mortgage
  • Loans and credit card debts
  • No savings to pay your funeral costs

You may need TPD insurance if you have:

  • A partner who relies on your income
  • A business you operate yourself
  • A risky occupation
  • An occupation where worker’s compensation may not be available
  • A mortgage and loan repayments

As many of these circumstances are common to both forms of cover, a combined Life and TPD insurance policy may be more beneficial than having separate insurances.

Do I already have life and TPD insurance?

Life and TPD insurance is a product that is often included in superannuation, so you may already be covered without even being aware of it.

You can check whether this is the case by going to your super fund’s website and reading the Product Disclosure Statement (PDS) for your policy, which should include details of any insurance cover. And if you are enrolled in your employer’s super fund or a default fund, you can find out by asking your employer.

Because it is a compulsory inclusion in all default super funds, your life and TPD cover may only provide basic protection and may not be adequate for your needs. So it is important to find out what level of cover is provided when life and TPD insurance is held inside superannuation.

How much does Life and TPD cover cost?

How would my family make a claim in the event of my death?

While procedures will vary slightly with each insurer, the typical steps involved in making a claim on a Life and TPD insurance policy following the death of the insured are as follows:

  • The beneficiaries contact the insurer and advise them of their intention to make a claim
  • The insurer sends them the claim form and instructions (typically within 10 days)
  • When the claim has been lodged, the insurer conducts an assessment
  • After examining the evidence, the insurer will either approve and pay the claim or deny it, in which case they must provide written reasons and inform the claimant of their right to request a review

Typical documentation required when lodging a claim will include evidence of the deceased’s identity, your identity and your financial dependence on them, a death certificate, the will, probate and letters of administration.

What to ensure before you make a claim

TPD claims are among the most disputed claims of all types of life insurance, so you will need to be aware of several important things before making a claim:

  • That you are eligible to claim (i.e. that you are totally and permanently disabled)
  • That you have satisfied a condition of release if your TPD insurance is held inside super
  • That your claim may be disputed by the insurer if your condition does not satisfy their particular definition of TPD

Learn more about TPD insurance claims

How does payout work?

Is there a reduction in my life cover following a disability claim?

Applicants must be aware that for most policies the sum insured for life cover will be reduced by the amount insured for the TPD benefit or partial TPD benefit. Similarly, any amount payable under the Life Cover benefit for terminal illness or Trauma cover will reduce the sum insured for TPD.

As an example, someone might have:

  • $400,000 insured for life cover
  • $150,000 for Total and Permanent Disablement.

If the person was to become totally and permanently disabled and receive their benefit payout for $150,000, their life cover would be reduced to $250,000.

How do I make sure my life sum insured is not reduced after a disability claim?

You can make sure you sum insured is not diminished by one of these three options:

What is the TPD Buy Back Feature?

Some policies will offer what is known as a TPD Buy Back benefit as an additional option with Total and Permanent Disability under Life Cover. This feature enables the policy owner to repurchase the life cover that was reduced following a claim for TPD.

Most policies will place restrictions around when the sum-insured can be reduced, usually within 30 days on the anniversary of when the claim was made.

Some companies will offer Buy Back as a built in feature on the policy while others will charge an additional premium for its inclusion.

What is the Double TPD Feature?

A Double Total and Permanent Disablement benefit will provide policy owners with a lump sum benefit if they become totally and permanently disabled as defined in their policy. In comparison to the standard buy back feature, the sum insured for life cover will not be reduced and some policies will waive future premiums on the Life Cover.

What are the requirements?

Requirements to be eligible for Double TPD may differ between providers but generally workers will have to be:

  • Engage in full-time employment or full-time unpaid domestic duties.
  • Working at least 20 hours per week OR performing domestic duties at the policy owners residence for a period of 20 hours per week.
  • Have been working in the position for at least 12 months.

Features offered on Double TPD

The following features may be offered on some Double TPD policies.

  • No reduction of sum-insured: The sum insured for life cover will not reduce following a TPD claim.
  • Waiver of premium for life cover: If the benefit becomes payable, the insurer will waive future premium payments for the life cover portion of the policy. The duration for this waiver may differ between providers and can be dependent on occupation class.
  • Financial Planning Payment: If a benefit becomes payable for TPD, the insurer will provide a benefit payment for the policy owner to seek financial advice. The benefit will be to an amount defined by the insurer.

Can I purchase double the life cover to avoid reducing my sum insured?

Another option for applicants is to purchase double the amount of life cover that they require and have life cover with TPD insurance linked to the extra life cover. This will ensure that if a TPD claim is made, there will still be a sufficient sum-insured for life cover in place.

What are the benefits of purchasing double life cover?

  • There will be no waiting period applied before the applicant can repurchase death cover.
  • Can attract premium discounts for a larger sum-insured.
BUYER BEWARE: The waiver of life cover premium will have to be purchased as an additional option.

What types of extra features are offered by TPD and Life?

If you combine disability and life cover together you will be able to benefit from the features of both.

TPD Inflation protection, partial disability benefit, premium freeze,double TPD benefit

Common features on both TPD and Life Cover
Inflation protection
Premium freeze
Unique TPD insurance featuresUnique Life insurance features
TPD buy back featureDeath lump sum payout to your dependents
Double TPDAdvance terminal illness payment

What should I be aware of when reviewing life and disability quotes?

Definition of disability

Definitions of what is recognised by insurers as disablement can vary greatly. Under an Own Occupation policy, the insured must be not be able to return to work in the occupation in which they are trained in. An Any Occupation policy will provide the benefit payment if the insured cannot return to any occupation that they may be suitable for following education and training. These definitions will also be dependent on the applicant's occupation.

Definitions are further complicated as insurers will specify disablement with duties, hours or income definitions.

  • Duties: Benefit paid if disablement causes a reduction in the number of duties that the policy owner can perform and this causes a reduction in income.
  • Hours: Number of hours is reduced as a result of their disability.
  • Income: Income is reduced as a result of their disability.

Benefits and features of the policy

As with any type of cover, it is crucial for the applicant to closely read through the product disclosure statements of the policies they are considering and weigh up the features and benefits available. Not all benefits will be suitable to every applicant and cutting out expensive extras can save thousands over the life of a policy.

Insurer offering the cover

It is always important to review the different providers offering cover. Consider financial strength, claims policy (usually provided on insurers website), company profile, customer base, customer service and product range. Articles discussing awards received and online customer reviews can offer valuable insights.

Compare life and TPD quotes

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