Total & Permanent Disability (TPD) Insurance Explained
Financial issues can feel overwhelming when you’re injured or sick. Total and Permanent Disability insurance may help reduce the resulting financial strain.
Total and permanent disability (TPD) insurance may pay a lump-sum benefit if illness or injury causes the insured person to meet the applicable policy definition. Depending on the policy, the assessment may consider the person’s ability to work, perform domestic duties or carry out specified activities of daily living.
Because TPD policies can differ significantly in their definitions, ownership structures, exclusions and limitations, understanding your options is not always straightforward.
Curo helps clients understand their options and recommends a policy and ownership structure that suits their circumstances, needs and objectives.
Explore Your Total & Permanent Disability (TPD) Insurance Options with Curo Financial Services
Comparing TPD insurance options can be complex. The definitions, exclusions and structures vary significantly between providers. Choosing an unsuitable amount, definition or ownership structure may leave you with less protection than you expect when making a claim.
This is where Curo steps in to help.
Our advisers take the time to understand each client’s circumstances, needs and objectives before providing personal advice within the agreed scope of the engagement. After we arrange a policy, we continue to assist clients with policy administration, claims and ongoing reviews.
Our team has experience with TPD policy selection, so we can help you understand the practical steps involved in the assessment and payment of TPD claims. We can also explain general considerations relating to policy ownership and taxation. If you need advice about a specific tax situation, you may need to speak with a qualified tax adviser or accountant.
How the TPD insurance advice process works
1. Initial discussion
We discuss what prompted your enquiry and explain how Curo may be able to assist.
2. Review of your circumstances and existing cover
Your adviser gathers information about your circumstances, needs and objectives, including any insurance you already hold.
3. Personal advice
Your adviser assesses the available options and makes recommendations within the agreed scope of advice.
4. Application and underwriting support
If you decide to proceed, Curo helps with the application process and communication with the insurer during underwriting. The insurer determines whether cover is offered and on what terms.
5. Ongoing client support
After a policy is arranged, Curo continues to assist with policy administration, claims and ongoing reviews.
Do I need a TPD Insurance policy?
TPD insurance may pay a lump-sum benefit if an illness or injury results in total and permanent disability. Eligibility for a TPD benefit depends on the applicable policy definition. Depending on the policy, the assessment may consider the insured person’s ability to work, perform domestic duties or carry out certain activities of daily living.
If cover was in force at the relevant time and the claim is accepted, the amount payable will generally be based on the applicable sum insured, subject to the policy terms, linked-benefit structure and any adjustments or earlier partial benefits.
Many Australians hold TPD insurance through super. Some eligible members receive default cover automatically, subject to applicable age, account balance, fund and legislative requirements. However, cover amounts, disability definitions, exclusions and continuation rules vary between funds. Default cover may not be aligned with a member’s income, debts, dependants or long-term financial needs.
Curo can provide advice on a wide range of insurance products. Depending on the insurer and product, advised retail TPD cover may offer different cover amounts, disability definitions, ownership options and policy features. Each option has its own potential advantages, costs and limitations.
What can a TPD benefit help pay for?
The benefit from TPD insurance may help you cope with the financial impact of permanent disability. It can be used to reduce debt and pay for medical and rehabilitation expenses. You can also use the benefit to fund home modifications or to support ongoing day-to-day living expenses.
Understanding what TPD insurance covers helps you plan how to use it.
Own occupation and any occupation definitions
One of the most important factors to consider is how a TPD policy defines total and permanent disability. The definition affects how the insurer assesses whether you are eligible to receive a benefit.
| Feature | Own occupation | Any occupation |
|---|---|---|
| What the insurer assesses | Whether you are unlikely ever to return to the specific occupation you held immediately before becoming disabled. | Whether you are unlikely ever to work again in an occupation for which you are reasonably suited by education, training or experience. |
| Practical effect | The assessment focuses on your usual occupation and may offer broader occupational protection for some professionals and specialised workers. | A benefit may not be payable if you are considered able to work in another suitable occupation, even if you cannot return to your previous role. |
| Availability | Availability may depend on the insurer, occupation, policy and ownership structure. | Commonly used for TPD cover held through super, although definitions vary between policies. |
| Important consideration | Check the exact definition, eligibility requirements and policy terms. | Check how the policy determines another occupation for which you are reasonably suited. |
Where TPD cover is held through super, satisfying the insurer’s policy definition does not automatically mean the benefit can immediately be released to the member. A separate superannuation condition of release may also need to be met.
Definitions differ between policies. Refer to the relevant PDS and policy terms to understand how a particular insurer defines total and permanent disability.
Do I need a TPD Insurance policy?
If you already have TPD insurance through your super fund, it’s reasonable to question whether that cover is sufficient. For instance, the default cover may not be suitable for an individual’s income, debts, dependants or long-term financial needs.
An individually underwritten retail TPD policy recommended by a financial adviser can give access to different cover amounts, definitions of disability, ownership options and policy features. Availability and terms are subject to the insurer’s underwriting requirements, occupation limits and product rules.
Holding cover inside super may reduce the immediate impact on household cash flow, but premiums deducted from a super account can reduce your retirement savings over time. Holding cover outside super generally requires that premiums be paid from your personal cash flow.
Beyond how premiums are paid, it is also important to understand how different policies define permanent disability. You can visit “TPD Own Occupation vs Any Occupation: Which Definition Protects You?” to learn more about each definition.
Relevant factors include your income, debts, dependants, existing financial resources and the support that may be needed if you become permanently disabled. Reviewing these factors may help identify a potential gap between your existing cover and your estimated financial needs.
A Curo adviser can assess these factors when providing personal advice within the agreed scope of the engagement.
Three Other Things to Know About TPD Insurance
In addition to basic information on cover and definitions, there are a few practical details that can cause problems later.
The following considerations can help you understand how cover may change over time.
Age limits
Entry ages, expiry ages and disability definitions vary between policies. Some cover ends around age 65, while other policies may continue to a later age or change to an activities-of-daily-living definition. Cover may also reduce before expiry, so check the relevant PDS and policy schedule.
At Curo, we use a panel of insurers with different age limits and policy structures. Curo’s advisers consider expiry ages, benefit reductions and changing definitions when assessing available policy options.
Taxation
The tax treatment of a TPD benefit paid through super depends on factors such as your age, the taxable and tax-free components of the benefit, the applicable condition of release and how the benefit is paid. In some circumstances, a disability super benefit may receive an uplift in its tax-free component. The eligibility requirements and calculations are complex, so the actual tax outcome will depend on your individual circumstances.
With the information you supply, Curo’s TPD taxation calculator can provide you with an estimate. This is not a substitute for personalised tax advice, and the actual tax treatment may vary.
Additional Policy Features
Apart from the lump sum, TPD insurance may come with a range of additional features worth considering when comparing cover. Depending on the insurer and policy, additional features may include:
- Partial payments for the loss of an arm or one eye prior to the assessment of the total benefit
- Inflation protection, which automatically increases your cover amount each year to adjust to rising costs.
- Financial planning benefits whereby the costs associated with financial advice are covered after your claim is paid.
- Guaranteed future insurability whereby the level of cover can be increased after major life events such as marriage or the birth or adoption of a child without medical reassessment
- Support benefits such as grief counselling and accommodation for your family members intending to travel to be with you.
These features are not available under every policy. Eligibility requirements, limits, exclusions and other conditions may apply. Refer to the relevant PDS and policy terms.
Why choose Curo Financial Services?
Here are some ways Curo can assist you with TPD insurance, and where the service is available, TPD insurance claims:
In-depth knowledge of TPD policies
TPD insurance is a specialist field, and the fine print matters. We understand in detail how insurers define disability, how claims are evaluated and how premiums are structured. This knowledge is informed by working with TPD policies and claims and reviewing policy documentation.
Access to a range of policy options
Curo can assess options from insurers that are available through its approved arrangements. Where personal advice is provided, our advisers assess available TPD options and explain the relevant features, disability definitions, ownership structures and trade-offs before making a recommendation based on the client’s circumstances and the agreed scope of advice.
Support from a team experienced in TPD insurance
Selecting a policy is only one part of managing TPD cover over time. Our team can assist with reviewing your cover as your circumstances change and, where the service is available, help guide you through the claims process.
Free TPD Claims Assessment (Check Your Eligibility In 5 Minutes)
Speak with a Curo adviser about your TPD options today.
Comparing TPD cover should not feel like guesswork or be left until a claim needs to be made. Instead, let the advisers at Curo take the time to look over your income, family responsibilities and existing insurance cover before recommending a cover amount, policy structure and ownership approach based on your circumstances, subject to underwriting and the range of options available.
Whether you are comparing new TPD insurance or reviewing existing cover, a Curo adviser can help you assess the relevant definitions, ownership structures and policy features. Request an initial consultation with a Curo adviser through our contact page, and receive a review of the factors relevant to selecting an appropriate level and structure of cover.
Our Claims Testimonials
Hear from clients we have assisted with insurance advice and, where applicable, support during the claims process.
Frequently Asked Quesrions
How much TPD Insurance do I need?
The amount of TPD cover you may need depends on factors such as ongoing living expenses, outstanding debts, potential medical and rehabilitation costs and the period for which financial support may be required. There is no single amount that is appropriate for everyone.
What's the difference between TPD Insurance and life insurance?
Life cover generally pays a lump-sum benefit if the insured person dies or, where included, is diagnosed with a terminal illness. The benefit is paid according to the policy ownership and any applicable superannuation arrangements. TPD cover generally pays if the insured person meets the policy’s total and permanent disability definition.
How do I buy TPD Insurance?
TPD insurance can be purchased directly from an insurer or through a financial adviser, or you may have a basic form of cover as part of your existing superannuation fund. When you seek advice through Curo, an adviser can assess options available through Curo’s approved product and research arrangements. The adviser can also explain relevant definitions, ownership structures, costs and trade-offs in light of the agreed scope of advice.
What illnesses or injuries can lead to a TPD claim?
TPD policies generally do not cover only a fixed list of medical conditions. A claim is assessed against the disability definition and other terms in the policy. A serious physical injury, mental health condition, neurological disorder or chronic illness may lead to a claim, but diagnosis alone does not guarantee payment. The insurer will consider the medical evidence and the way the condition affects the insured person under the applicable definition. Exclusions and other policy terms may also apply.
Who is eligible for TPD insurance?
Insurers and products have different eligibility requirements and entry ages. Relevant factors may include age, residency, occupation, employment status, health, lifestyle and the amount of cover requested. Refer to the applicable PDS and insurer eligibility criteria.
Can I take out TPD Insurance without a medical examination?
A medical examination is not required for every TPD application. However, you’ll need to answer detailed questions regarding past medical history, current state of health, occupation and lifestyle. Applicants should answer the insurer’s questions accurately and completely. Incomplete or inaccurate information may affect the policy or a future claim.
Is TPD Insurance the same as trauma insurance?
No, though they are often mistaken for each other. TPD insurance may pay a lump-sum benefit if illness or injury causes the insured person to meet the policy’s total and permanent disability definition.
Trauma insurance, also known as critical illness insurance, may pay a lump-sum benefit if the insured person experiences a specified medical event and meets the policy definition. Eligibility is generally not based on whether the person can continue working.
Is it worth having TPD insurance?
TPD insurance may be worth considering where permanent disability would create significant financial pressure. Whether it is appropriate depends on the potential financial impact and the other resources available, including savings, existing insurance and access to other support.
Is TPD Insurance tax deductible?
The tax treatment of TPD insurance depends on how the policy is structured and owned. Premiums for personally owned TPD cover are generally not tax deductible to an individual. Individual circumstances can vary, so professional tax advice may be appropriate.
If the TPD cover is held through super, premiums are generally deducted from the member’s superannuation account. The super fund may be entitled to claim a tax deduction for some or all of the premium, subject to the applicable tax rules. This does not mean the member personally claims the deduction.
The taxation of a TPD benefit can also differ depending on whether the cover is held personally or through super, the recipient’s circumstances and how the benefit is accessed. Consider obtaining professional tax advice about your circumstances.
How do I claim TPD insurance?
After arranging a policy, Curo continues to support clients with claims, policy administration and ongoing reviews. If you need to make a claim, we can help you understand the insurer’s requirements, organise relevant information and communicate with the insurer during the assessment process. The insurer remains responsible for assessing the claim against the relevant policy terms and supporting evidence and deciding whether a benefit is payable.
Discuss your TPD insurance options
A Curo adviser can help you review your existing cover, understand relevant policy definitions and assess options available through Curo’s approved arrangements. Request an initial consultation to discuss your circumstances.
General advice warning: The advice provided is general advice only and in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.