Total and Permanent Disablement (TPD) insurance provides a lump sum in the event that you become totally and permanently disabled (as defined in the insurance policy). A TPD payment is normally paid after being totally incapacitated for at least six months.
Insurance companies offer two types of TPD policies – 1) TPD ‘Own Occupation’, which pays a lump sum of money if the insured person is unable to perform his/her own occupation; and 2) TPD ‘Any Occupation’, which only pays if the insured person is unable to perform any occupation for which they could be suitably trained.
In both circumstances the incapacitation must be verified by at least two medical practitioners.
If you have TPD insurance inside your superannuation then the only option available for that policy is the ‘Any Occupation’ definition. This is because of the (SIS) legislation and the requirements to meet the conditions of release from superannuation.
Many people ask why TPD insurance is so important in comparison to Trauma insurance for example. Some examples of sicknesses or injuries not covered under all trauma insurance policies that may render the life insured eligible for a TPD benefit are:
- Central Nervous System Disorders;
- Chronic Brain Syndromes;
- Emotional Disorders including depression and post-traumatic stress;
- Cardiovascular Disorders including hypertension and congenital heart problems;
- Musculoskeletal Disorders including osteoarthritis and rheumatoid arthritis;
- Ear and Eye Disorders including retinal detachment;
- Gastrointestinal Disorders;
- Endocrine Disorders: diabetes;
- Respiratory Disorders; and
- Pulmonary Fibrosis and Emphysema.