Total and Permanent Disability Insurance

Total and Permanent Disability Insurance

 - What is it and when are you eligible to claim?

Total & Permanent Disability or TPD insurance cover pays a lump sum benefit if the insured person, depending on the TPD definition selected:


  • Is unlikely to work again
  • Is unlikely to perform household duties again, or
  • Suffers a loss of ability due to a permanent disability


This benefit could be used for repayment of debts like mortgages, loans or credit cards, meet rehabilitation and home modification costs, provide financial support to make necessary lifestyle adjustments, or protect your business in the event that a key person or principal permanently exits the business due to total and permanent disablement.

The most common way we see this cover held is as an additional benefit to a Life cover policy. Often people with retail or industry superannuation funds find they have an amount of Life and TPD cover provided as 'default cover' when they joined their fund. Or they may have applied for an additional amount of cover with their super fund.

But do you know the definition of disability that you will need to meet to make a claim on this cover? You may have heard the terms 'any occupation TPD' or 'own occupation TPD' – but what do they mean and how can it make a difference to a claim by having one or the other of these definitions for your disability cover?

Any Occupation[1]

The insured person will be considered to be Totally and Permanently Disabled if they suffer:

  • Sickness or injury which has prevented the insured person from working in their own occupation for at least 3 consecutive months; and
  • The 3 month period has ended before the next renewal date on or following the insured person's 65th birthday; and

The sickness or injury makes it unlikely that the insured person will ever again be able to work in any occupation for which they are reasonably qualified because of education, training or experience. 

Own Occupation:[2]


The insured person will be considered to be Totally and Permanently Disabled if they suffer:

  • sickness or injury which has prevented the Insured Person from working in their own occupation for at least 3 consecutive months;
  • the 3 month period has ended before the review date on or following the Insured Person's 65th birthday; and
  • the sickness or injury makes it unlikely that the Insured Person will ever again be able to work in their own occupation.


If you hold your TPD cover through superannuation, whether as default cover provided by your retail super fund, cover you have applied for with an insurance provider that is being paid from an existing retail super fund or from your own SMSF, or for TPD cover that you have applied for over the phone through a direct insurance provider, the most common TPD definition you will have in place is 'any occupation'. And as you can see above, this is a much broader definition of disability to meet than 'own occupation'.

Unfortunately there are many people who have not been able to make a successful claim on their TPD policy because they have not met the correct definition of being disabled. These cases often end up before the Court and can take years before any decision is made.

If you are interested in having your insurance cover reviewed please give our Financial Planning team a call to arrange a meeting with our Risk Specialist.

[1] BT Life Product Disclosure Statement 19/5/14 Definitions


[2] BT Life Product Disclosure Statement 19/5/14 Definitions

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