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Total and permanent disability (TPD) insurance can be a valuable safety net for you and your family if an injury or illness renders you permanently disabled and unable to return to work. If you’re looking for cover in this area, however, finding the right policy for you often isn’t as simple as picking the first one you come across.
By comparing with Savvy, you’ll be able to consider competitive TPD insurance policies from a panel of trusted, industry-leading life insurers. Simply fill out a free, no-obligation quote and you’ll have a variety of available offers to consider side-by-side. Get the process started with Savvy today.
Total and permanent disability insurance, as the name suggests, is a type of life insurance which provides a lump sum payment if the life insured suffers an illness or injury which prevents them from ever returning to work again. This could be as a result of losing the use of your legs in a car accident or suffering a stroke.
Upon an approved claim, the policyholder will receive a lump sum benefit. There aren’t any restrictions on how you use those funds; you may choose to spend it on living expenses, like food and bills, or to pay off medical expenses. TPD cover is particularly useful if you need to make modifications to your home, like installing a ramp for wheelchair access or if you need to pay for a carer.
Each insurer defines disability differently, so it’s important to read your policy document carefully and compare them with Savvy. However, your TPD insurance will fall into one of two main categories:
This means you may be able to claim for partial disability, provided you have an Own Occupation policy and prove to your insurer that you aren’t able to complete any work in your current position. If you have an Any Occupation policy, you may still be able to claim for partial disability, though it may be more difficult to receive a payout on the basis that your insurer may deem that your disability doesn’t rule you out from all types of work.
In terms of what isn’t covered, you won’t be able to claim for a disability which prevents you from working temporarily, rather than permanently. This may be a condition which requires a few months or years to recover from. Your family also won’t be able to claim in the event of your death, nor will you be covered if you receive a serious illness diagnosis which doesn’t permanently prevent you from working.
All coverage is subject to your insurer’s terms and conditions, so it’s important to check your PDS and with your insurer if you’re unsure of what can be covered under your policy.
The cost of your premiums will be based on a variety of individual factors and is largely determined by how different insurers assess your risk profile. The insurer will usually ask for the following information when you apply for a policy:
Life insurance can be crucial in helping your family recover financially. If you’re unable to work, you’ll need to think about how you’ll cover your expenses. Do you have enough savings and assets to be comfortable? Will you have enough money to pay for medical bills, long-term therapy and modifications to your home? If your answer to either of these questions is no, you may need TPD insurance.
Here are just some of the ways TPD insurance can help you:
Life cover can pay a nominated beneficiary a lump sum if you’re diagnosed with a terminal illness or pass away. This type of insurance can provide your immediate family or another loved one some financial assistance to cover funerals, medical costs and day-to-day expenses.
If you’re injured or too sick to work for an extended period, income protection insurance is designed to help you focus on your recovery. You can be covered for up to 70% of your usual wage for a chosen period, such as five years or up to age 65, depending on the level of coverage you buy.
This type of insurance is designed to offer cover to those who are permanently disabled by injury or illness and are no longer able to work. You can choose to take out cover for an inability to work in your current job or in any role suited to your qualifications.
Trauma insurance is a type of policy which provides you with a lump sum payment in the event of a critical illness or major accident. The conditions eligible for claims will be outlined in your insurer's PDS, but can include cancer, heart disease, severe head trauma and cardiovascular disorders.
If you suffer from a pre-existing condition, it’s particularly important to compare policies to determine whether disability stemming from your condition can be covered. This may be automatic, available as an optional extra or excluded entirely, so it’s worthwhile comparing in this area if you find yourself in such a position.
If you’ve made a claim and it’s been approved by your insurer, you’ll receive your benefit as a one-off lump sum, potentially allowing you to pay for costly expenses such as modifications to your home or expensive equipment.
TPD Insurance is generally cheaper than other types of insurance, such as income protection, though the cost will depend on your risk profile as determined by your insurer.
You generally won’t need to pay tax on the amount you receive from your TPD policy, as these insurance payouts are typically tax-free.
If you become permanently disabled due to a covered injury or illness, you can rest assured you and your family can receive your policy’s payout to add greater financial support.
TPD insurance only covers you if you become permanently or completely incapacitated and won’t cover you if you sustain a temporary disability. In this case, income protection may be a more suitable policy to hold.
If your pre-existing condition is deemed a significant enough risk, it may be excluded from your coverage entirely (or available with additional loading).
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Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of life insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a life insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.
Savvy does not compare all life insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.
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