Own Occupation

Own Occupation Total and Permanent Disability (TPD) Insurance pays a lump sum benefit in the event that you are totally and permanently disabled and unlikely to ever be able to return to your own or specific occupation.

no-1Advantages of Own Occupation

The main advantage of Own Occupation TPD is that it provides cover for your Specific Occupation, meaning you can still be paid a benefit if you are able to work in another occupation that is not your own.

no-2What is my Own Occupation?

Own Occupation is defined as the most recent occupation the insured person was engaged in before the date of total and permanent disablement.

In the case where you have recently changed jobs, select life insurers will use the more favorable of:

  • The occupation at the time the policy was taken out or;
  • The most previous occupation prior to becoming totally and permanently disabled.

Please note that this is a general definition only and exact definitions will differ between insurers. Please refer back to relevant PDS for a more exact definition of the policy

TPD Quotes from Australia’s Leading Providers

  • Own vs Any Occupation
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no-3General Policy Details

Entry Ages:16-64
Policy Conversion Age:65-70 (Policy will generally convert to Modified TPD)
Policy Expiry Age:65-100 (Depending on your insurer)
Max Sum Insured:$5,000,000

no-4What can the benefit be used for?

The lump sum benefit is designed to help you and your family if you are never able to work again.

Some ways the benefit could be used include:

Debt repayments

Medical Costs

Home Modification

Providing an Income

no-5Definition

In order to claim:

  • The insured person must be absent from and unable to work in their own occupation for a period of at least 3 – 6 months due to an accident or sickness; and
  • The insured person’s injuries or sickness are determined to be so severe by at least one medical practitioner (medical evidence present), that they are rendered totally and permanently disabled and unlikely to ever be able to return to own occupation.

no-6What is the Partial payment benefit?

Select life insurers offer partial benefits of up to 25% of the sum insured in the event the insured person suffers the permanent loss or use of:

  • One arm
  • One leg
  • The sight of one eye

If later the insured person becomes totally and permanently disabled, generally the policy will pay out the balance of the sum insured.

no-7Own Occupation vs. Any Occupation

Own Occupation TPD offers a higher level of cover than Any Occupation as it provides cover for your own, specific occupation.

Its main benefit is that if you are unable to continue working in your own or specific occupation but can continue in another occupation, you may still be able to receive a benefit.

For this reason it is generally more expensive than Any Occupation, which doesn’t provide cover if you are able to continue working in another occupation.

Any Occupation, is the most common form of total and permanent disablement cover in Australia. It is designed to cover you for Any Occupation that you are suited to by training, education or experience.

no-8Superannuation

While TPD cover is generally available to be taken out through superannuation, Own Occupation is no longer available through super.

If you have already have Own Occupation TPD insurance through your super fund, your cover remains in place.

A number of other things need to be taken into account:

The Insurance Premiums are no longer fully tax deductible to your superannuation fund and may only be partially tax deductible.

Accessing lump sum payments prior to retirement age may be difficult. In order to access funds, the superannuation fund must meet the conditions of release under SIS Regulations which states that:

1. ‘A trustee must be reasonably satisfied that the member (the person who is receiving the release of benefit) never intends to become gainfully employed in a full time or part time capacity.’ (APRA Prudential Practice Guide, Page 8)

2. ‘The trustee must be satisfied that retirement has occurred which may include presenting evidence of the member’s age, cessation of employment or intention of member to never be employed in a part time or full time capacity.’ (APRA Prudential Practice Guide, Page 8)

Case Study:

Steve is a neurosurgeon and takes out Own Occupation policy to protect his family and himself in the event that he suffers an injury or sickness which renders him totally and permanently disabled, and unable to return to work as a surgeon.

Unfortunately Steve is involved in a car accident and is forced to have his arm amputated. As both arms are critical in Steve’s job as a surgeon, he is unable to return to his role and is able to claim a lump sum payment under the terms of his Policy.

As Steve trained as a doctor before becoming a surgeon, he is able to return to work as a consulting doctor but still receives his payout as it was not his own occupation. Had he taken out Any Occupation, he would not have received a payout.

Firstly, you should check your policy to see that you don’t have a back and/or spinal exclusion on your policy. I hope not, but I want to make sure that you check this. I guess that you would probably recall if this was the case, when you applied for the policy?

Your policy will likely have a Waiting Period which might be 14 days, 30 days or 60 days for example. Which means from the date a Medical Doctor declared you unfit for work, you must wait this period before your benefit period starts. Check your policy if it has an option where due to an accident ( if that was what caused your back injury ) you can potentially receive benefits during the Waiting Period. Your Benefit Period might be 2 years, 5 years or to age 65 for example which means you could be paid your monthly benefit for up to that period of time if you are unable to work and are following the advice of a Medical Doctor during that time in relation to your back injury. This is also dependent on that the Life Insurance Company agrees with your Doctor that your disability is continuing. Remember Monthly Benefits are generally paid in arrears so therefore you would likely see the first monthly benefit about 30 days after your waiting period finished. These are all important parts of your Income Protection Policy especially if it is the case that you will unable to work for a lengthy period of time so your Benefit Period will be crucial in your situation.

We also provide an Initial Claims Assistance Service, so you are welcome to call our offices on 1300 135 205 and we may be able to assist you with your Initial Claim.

Published: March 7, 2017

Ask an Expert?

2 Comments

  • Peter Powell |

    I have been off work due to a back injury resulting in a spinal fusion and cannot go back to my pre-injury work. I have an Income Protection policy and I work in the Heavy Construction Industry. What happens in my situation now as I have a Doctor and a Surgeon stating that I will not go back to my type of work?

    • Brett Lenertz SPECIALIST
      Brett Lenertz |

      Firstly, you should check your policy to see that you don’t have a back and/or spinal exclusion on your policy. I hope not, but I want to make sure that you check this. I guess that you would probably recall if this was the case, when you applied for the policy? Your policy will likely have a Waiting Period which might be 14 days, 30 days or 60 days for example. Which means from the date a Medical Doctor declared you unfit for work, you must wait this period before your benefit period starts. Check your policy if it has an option where due to an accident ( if that was what caused your back injury ) you can potentially receive benefits during the Waiting Period. Your Benefit Period might be 2 years, 5 years or to age 65 for example which means you could be paid your monthly benefit for up to that period of time if you are unable to work and are following the advice of a Medical Doctor during that time in relation to your back injury. This is also dependent on that the Life Insurance Company agrees with your Doctor that your disability is continuing. Remember Monthly Benefits are generally paid in arrears so therefore you would likely see the first monthly benefit about 30 days after your waiting period finished. These are all important parts of your Income Protection Policy especially if it is the case that you will unable to work for a lengthy period of time so your Benefit Period will be crucial in your situation. We also provide an Initial Claims Assistance Service, so you are welcome to call our offices on 1300 135 205 and we may be able to assist you with your Initial Claim.

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