Total and Permanent Disability Insurance

TPD Insurance, or Total and Permanent Disability Insurance is a type of insurance policy designed to provide financial protection for those who become disabled due to an illness or injury. It helps protect individuals from the financial consequences of becoming disabled and unable to work. With TPD Insurance, you can ensure that your family’s financial future is secure in the event of a long-term disability.

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Benefits of TPD Insurance

  • Pays a lump sum benefit to your beneficiaries when you pass away or get diagnosed with a terminal illness.
  • Worldwide cover,  24/7
  • You can apply if you are aged between 10 and 74 years old
  • Available for purchase through your superannuation.

What is TPD insurance?

TPD is a type of insurance that provides you with financial support in the form of a lump sum benefit, should you become totally and permanently disabled due to an illness or accident, and a medical professional has certified that you are unlikely to ever work again, either in your own or any occupation reasonably suited to your education training or experience, depending on your policies definition.

Advantages of TPD cover

If you are permanently disabled and unable to work due to an illness or injury, you’ll typically be able to use the lump sum payment to:

How much does TPD cover cost?

The price you’ll pay for disability insurance depends on various factors, including your age, gender, smoking status, the amount of cover you need and your occupation.

The premium you’ll pay for total and permanent disability cover will also depend on your choice of:

How much TPD insurance do I need?

When determining the appropriate amount of Total and Permanent Disability (TPD) insurance you need, several key factors should be taken into consideration. However, it’s important to remember that each situation is unique and affordability will depend on your personal requirements.

  • Assess your financial situation: To get a clear picture of your financial situation, it’s important to take stock of all outstanding debts. Additionally, consider any ongoing obligations such as child education expenses or other recurring payments. Finally, calculate your family’s regular monthly or annual expenses, including utility bills, groceries, and other essentials.
  • Estimate possible medical costs: Research and estimate the potential medical expenses that may arise in the event of a disability. This includes accounting for costs associated with medical treatments, rehabilitation, assistive devices, and ongoing care that may be required.
  • Determine necessary ongoing income: Assess the income required to maintain your family’s current lifestyle in the event of a permanent disability. This involves taking into account various factors such as the expenses for your children’s education and retirement savings for your spouse.
  • Identify existing coverage and assets: It is important to ensure that your family’s financial needs are met in case of a permanent disability. To avoid overlapping coverage, reviewing your current TPD insurance policies and income protection plans is recommended. Additionally, it is wise to assess other assets you may own, such as savings, investments, or real estate, which could serve as a support system for your family during such difficult times.
  • Consider future financial changes: As you approach retirement, it is important to consider the potential reduction in financial responsibilities and expenses. To ensure that your family’s financial needs are met in the long run, it is crucial to evaluate how those needs might evolve over time and adjust your coverage accordingly.
  • Remove non-essential items from coverage: It’s important to review your insurance coverage to ensure that it meets the changing financial needs of you and your family. One consideration to keep in mind is whether or not to exclude a substantial superannuation balance from your TPD insurance coverage. Additionally, it’s wise to assess your other insurance policies to avoid redundancy in protection.

Definitions in TPD

Life insurance companies have different TPD definitions. When comparing Total and Permanent Disablement (TPD) insurance policies, read the insurer’s product disclosure statement (PDS) and make sure you know which definition you are covered for and when they will and won’t pay a claim. 

Typically, insurers define total and permanent disablement in one of 4 ways; Own occupation, Any occupation, Home duties and Activities of Daily Living.

Stand-alone vs linked vs flexi-linked

When purchasing total and permanent disability insurance the premium you pay will also be reliant on whether you buy a stand-alone policy, combine it with another insurance product or use super-linking.

  1. Stand-alone: Generally, this type of TPD insurance policy is held separate from other cover types. When you claim on a standalone policy, the benefit you’ll receive won’t affect the benefits you have with different cover types.
  2. Linked: This is also known as combined policies, which combine Life Insurance and TPD Insurance into one policy. When you claim on the TPD portion of your cover, your total cover amount will reduce by the lump-sum paid. However, this option is typically more affordable than a standalone policy.
  3. Super-linked: Similar to a combined policy; however, superlinking allows you to separate ownership between your superannuation and being self-owned. This enables you to have, for example, Life Insurance in your super fund and the super-linked Own Occupation TPD cover held in your name.
  4. Split TPD: Allows you to separate ownership of your TPD policy into 2 parts. With the Own occupation part being self-owned and the Any Occupation part being owned in a super annuation environment allowing you to fund more of your premium using your super monies as opposed to your personal cash flow. 

Built-in benefits

Generally, TPD cover can often come with specific built-in benefits. Usually, the more benefits included in a policy, the more expensive your premium might be, however, this is not always the case. While TPD benefits differ from insurer to insurer, some common built-in benefits include:

Partial benefit

Typically pays 25% of your sum insured up to $500,000, if you suffer the loss of one limb or loss of sight in one eye.

Future insurability benefit

This benefit allows you to increase your level of cover without supplying additional medical information when a significant life event occurs. For example, getting married or buying a new home (principal place of residence), increase in mortgage, the birth of a child or divorce. However, it’s important to note that this varies depending on who you’re insured with.

Financial advice benefit

Will reimburse you for the cost of obtaining advice from a financial adviser, up to a specific amount ($2,000 – $5,000, depending on the insurer).

Premium freeze option

This option is generally a built-in benefit that comes with your policy. It allows you to freeze your premiums which means that instead of the premiums increase each year on stepped premiums the benefit amount reduces instead.


To guard your policy against inflation and keep up with rising prices, the sum of money you are insured for will either increase by a predetermined percentage (usually between 3-5%) or in line with CPI annually.

Interim cover

The interim cover benefit provides a lump-sum payment should you become totally and permanently disabled as a result of an accident during your policy assessment. It generally pays out the lesser of $500,000 or your sum insured applied for.

We make it easy for you to compare policies online with our powerful comparison engine.

Buy with confidence today for peace of mind tomorrow.

TPD insurance inside Super

When you obtain insurance through your superannuation, the fund becomes the holder of the policy. Before accessing any pay-outs, though, you must fulfill both a Superannuation Industry Supervision (SIS) condition of release and  policy’s definition before having access to the funds. Typically, you’ll have the option to buy TPD cover inside Super.

However, default Group insurance TPD cover may not be provide an adequate level of protection, as it is a one size fits all proposition and not tailored to meet your unique requirements.

TPD insurance and tax

When it comes to TPD insurance, tax is a factor that you need to consider because there are several different ways it can affect your pay-outs and premiums. Generally speaking, TPD insurance premiums are not tax deductible and you typically won’t need to pay any taxes on a lump sum benefit.

However, if you have TPD inside super and need to claim total and permanent disablement before your preservation age, you may have a tax-free segment called ‘ Super Disability Benefit’, but the remainder of your benefit will usually be taxed when drawn as a lump sum.

It’s important to understand how different tax rules could affect your policy when it comes time to claim.

*Note: We are not registered tax agents. We encourage you to seek guidance from your accountant or a tax specialist should you need any information regarding taxes.

Common TPD insurance exclusions

It’s important to know that disability policies usually contain specific exclusions. Depending on the insurer and the policy you choose, the company may exclude injuries or illnesses that are directly or indirectly the result of:

Remember all policies are different. Please read your product disclosure statement (PDS) for a full list of exclusions.

How to claim TPD insurance

If you have been completely and permanently disabled due to a sickness or accident, then you may be eligible for disability benefits. To claim those benefits, reach out to the insurer’s claims department and fill out their forms with all necessary medical records included. Your appointed claims manager will review your submission once it is complete.

What to do if you need to claim

Should you become ill or are injured and unable to work, you’ll generally need to meet your TPD definition, you’ll generally also need to:

Take note; Select insurers may choose to seek additional evidence to conclusively prove that you are totally and permanently disabled.

Frequently asked questions and answers

  • Do I need TPD cover?

    Typically this depends on your personal requirements. TPD cover may provide you with a lump sum payment if you become totally and permanently disabled due to an injury or illness. This could help pay for medical expenses, home modifications and other costs associated with your disability. Considering the cost of such expenses, it’s worth considering taking out TPD insurance at some point in your life.
  • Can you claim TPD and life insurance?

    Yes, generally you’ll be able to claim on both of these types of policies provided that you meet the requirements set out in the PDS of your policy. Typically, it’s a good idea to contact the insurer directly to learn more about making a claim.
  • How long do TPD claims take?

    Generally, you’ll need to be absent from work for a continued 3 to 6 months’ before you can lodge a valid TPD claim. The length of time you’ll have to wait for the lump sum payment generally depends on the insurer’s claims assessment process and how quickly you provide them with the completed claim forms and supporting documentation.
  • Can you work after a TPD payout?

    With the assistance of medical advances, you might one day be able to return to work even when a TPD claim has been paid. In such instances, you usually won’t have to repay the lump sum benefit, unless there’s evidence of fraud. However, it’s best to get legal advice from a professional as each insurance company has different guidelines.
  • Are TPD premiums tax deductible?

    Your TPD policy premiums may be tax-deductible to your super fund if you take it out through superannuation. Premiums for TPD cover held outside of super is typically not tax deductible because ATO does not view it as an income replacement. However, it’s important to note that we are not tax specialists so it is best to consult with an expert.

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