Total and permanent disability insurance (TPD) is a type of life insurance, that generally provides a lump sum if you become totally and permanently disabled and you’re unlikely ever to return to work you’re reasonably suited for, due to an injury or illness. Different insurers will have different definitions of what this means. TPD insurance can pay you a benefit payment to help with ongoing care and possible home modifications that may be required because of an unfortunate life changing injury or illness.
Medibank’s TPD Cover as an add-on to Life Insurance can provide cover if you’re unlikely to work in any occupation that’s reasonably suited to you by education, training, or experience.
What is TPD insurance for?
Total and permanent disability insurance can be used to help cover:
- medical expenses
- rehabilitation and therapy costs
- cost of living expenses
- debts like your mortgage, car loans
- reskilling costs
- modifications to your housing or transport.
There aren’t any rules around what you can use the benefit payment for, but you should consider how your life would be impacted if you’re no longer able to work and generate an income.
How can I apply for TPD insurance?
There are several ways you can take out total and permanent disability insurance. This depends on whether you like to do everything yourself or require some assistance. If you prefer to do everything yourself, some insurers will have a fully online quote and application process. Alternatively, if you require financial advice and assistance on how you should structure your insurances, a financial adviser or insurance broker will be able to help you.
TPD insurance can be structured either as a standalone policy (meaning you’re covered for TPD only), or as an add-on cover to your life insurance. When TPD insurance is an add-on to your life insurance, it’s also common that your life insurance sum insured is reduced by any benefit payments from your TPD insurance. If TPD insurance is an add-on, premiums will typically be lower, but the total amount of cover may also be lower.
Medibank Life Insurance provides the option to select TPD Cover as an add-on cover to life insurance, and the option to apply online or over the phone with no medical tests required. You can apply between ages 18 to 60 for varying amounts depending on your age.
Should I consider TPD insurance?
Total and permanent disability insurance helps to provide cover if you face a serious injury or illness that would affect your working capacity. It’s worth considering some key factors if you’re looking into TPD insurance:
- If you were unable to work in any capacity, would you be able to pay your bills and meet your cost-of-living expenses?
- Do you have other insurances that could help cover a similar event, if you were unable to work, like income protection insurance?
- Do you have a level of existing cover that’s worth considering? Check with your employer and super fund to know your current level of cover.
- Your level of cover in private health insurance to cover medical expenses.
- The support you could receive from your family and friends.
The risk of a disability also becomes larger as you get older. 8% of people between the ages of 20-24 have a disability, which rises to 17.6% for people between the ages of 50-54. A percentage of that would be classified as a total and permanent disability which would impact the ability to work.
Of people who are disabled, the most common type of disability between ages 25-64 is restriction in physical activities or work and chronic recurring pain or discomfort.
The type of work you do and risk factors that could be present are all worth considering when selecting the right type and amount of insurance for yourself.
How long does it take to receive a payout for TPD insurance?
Insurers generally require you to be off work due to an injury or illness for a consecutive period of between 3-6 months, and that you meet their definition of total and permanent disability/disablement. The insurer will need to be satisfied that you’re unlikely to return to an occupation suited to you again and that the injury or illness has left you permanently disabled. This usually means that you’ve exhausted all options available to you, including having all necessary surgeries and treatments as advised to you by your medical practitioner and specialists. Once the insurer has obtained all relevant documentation and are satisfied with their assessment of permanency, the TPD benefit can generally be paid to you.
Because of this process, TPD insurance claims can take months to be assessed.
How much does TPD insurance cost?
The cost of TPD insurance will depend largely on your cover amount, your age, smoker status and any other medical or pastime information you disclose during the application process. The higher the amount of cover, the higher premiums you’ll usually be required to pay.
As an example, Medibank Life Insurance for a 35-year-old non-smoking woman would cost $20.67 a fortnight in premiums. TPD Cover would be an additional $12.65 a fortnight for $500,000 in cover.1 This pricing is to be used as a guide. For a quote specific to your circumstances, you can get a quote here.