Total & Permanent Disability Insurance (TPD)

What is total and permanent disability (TPD) insurance cover?

TPD pays you a lump sum if you become totally and permanently disabled. The definition of total and permanent disability varies between insurance companies. It can mean that you are disabled to the extent that you will probably be unable to work again in your occupation or in any job.

Income protection insurance will help to replace a portion of your income when you are unable to work due to illness or injury, but if you are permanently unable to return to work it is also useful to have a lump sum of money to cover your immediate medical needs as well as to clear any outstanding debts. Total and Permanent Disability (TPD) insurance can be used for this purpose.

Compare the rest of your options when it comes to term life insurance using our website:

Compare Term Life Insurance

How much TPD cover should you have?

The appropriate amount of cover for you will depend on both your family and financial situation. Your income protection policy will be your main source of ongoing cash flow so TPD is primarily to provide for medical needs and the payment of debt. As a basic guide, a TPD policy may be used to:

  • Provide a lump sum for immediate and ongoing medical needs.
  • Pay off any personal debts.
  • Pay off your mortgage.

Keep in mind that there is more to disability than just medical needs – your home may need some renovations so that you can get around in a wheelchair, a walker, or even a blind person’s cane.

Case Study:

total and permanent disability coverJesse, aged 54, is married with two adult children. He and his partner own their own home but they have a mortgage of $350,000 on an investment property.

Jesse works full-time as a psychologist, earning $75,000 per year. Jesse has income protection insurance, but he also wants peace of mind that if he were to become severely disabled and unable to work, he and his wife could pay off the investment home loan. That would give his wife the flexibility to potentially scale back her working hours to take more of a primary carer role for him.

As such, Jesse has calculated his TPD insurance needs as follows:

$30,000 – Immediate lump sum for medical costs

$350,000 – Mortgage repayment

Total – $380,000

Jesse calculates that his 75% income protection policy would then be sufficient to replace his existing cashflow.

Please note this is just an example – the needs of each person will be different. As an information provider, CANSTAR only provides general advice and does not take into account your objectives, financial situation, or needs. You should talk with a financial adviser about your specific and individual needs.

How much does TPD insurance cost?

The following premiums are current as at our 2016 Advised Life Insurance star ratings. Monthly premiums have been rounded to the nearest dollar.

TPD (Male – Stepped)Monthly Premiums ($/month)
Occupation Sum Insured Min Max Average
Twenties Professional $750,000 $30 $40 $35
White Collar $500,000 $21 $30 $27
Light Manual $500,000 $27 $43 $36
Blue Collar $500,000 $32 $55 $43
Thirties Professional $1,500,000 $58 $81 $66
White Collar $1,500,000 $60 $81 $68
Light Manual $1,000,000 $43 $78 $64
Blue Collar $1,000,000 $60 $105 $78
Forties Professional $1,500,000 $129 $181 $149
White Collar $1,500,000 $134 $181 $155
Light Manual $1,000,000 $92 $186 $145
Blue Collar $1,000,000 $134 $256 $180
Fifties Professional $1,000,000 $365 $477 $429
White Collar $1,000,000 $365 $507 $448
Light Manual $750,000 $341 $614 $505
Blue Collar $750,000 $437 $824 $630
TPD (Female – Stepped)Monthly Premiums ($/month)
Occupation Sum Insured Min Max Average
Twenties Professional $750,000 $32 $40 $36
White Collar $500,000 $22 $30 $28
Light Manual $500,000 $27 $43 $36
Blue Collar $500,000 $35 $55 $44
Thirties Professional $1,500,000 $58 $81 $66
White Collar $1,500,000 $60 $81 $68
Light Manual $1,000,000 $43 $78 $64
Blue Collar $1,000,000 $60 $105 $78
Forties Professional $1,500,000 $103 $182 $146
White Collar $1,500,000 $103 $182 $152
Light Manual $1,000,000 $92 $186 $142
Blue Collar $1,000,000 $109 $256 $177
Fifties Professional $1,000,000 $383 $555 $445
White Collar $1,000,000 $405 $555 $465
Light Manual $750,000 $338 $614 $522
Blue Collar $750,000 $502 $825 $650
Source: www.canstar.com.au  Average premiums current as at 17 August 2016. Average premiums have been rounded to the nearest dollar.

What else to consider in relation to TPD insurance

There are a range of considerations when selecting a TPD insurance policy. A few common factors you should take into account include:

  • The definition of TPD. Check the specific definition of “total and permanent disability” with your chosen insurance company, as this can vary between providers.
  • Own occupation – or any? Some insurance policies will pay out if you are permanently unable to perform the duties associated with your own occupation, while others will only pay out if you are unable to perform any occupation to which you may be suited. Consider which of these definitions you should be insured for.
  • A linked life insurance and TPD policy? Generally it will be more cost-effective for you to purchase TPD insurance as part of a life insurance policy, rather than as a stand-alone product.
  • A buy-back option. A buy-back option is an additional benefit that can be purchased if you have a linked life insurance and TPD insurance policy. If you make a TPD claim, a buy-back option gives you the ability to re-instate your life insurance sum insured by the amount that you have claimed.

Latest in TPD Insurance

Other Types of Insurance

Advised Income Protection

Income Protection

Life Insurance

Life Insurance (term insurance)

Trauma Insurance

Trauma Insurance (Major Illness)