Total and Permanent Disability (TPD) insurance pays a lump sum if illness or injury permanently stops you working. It’s designed to clear debts, fund medical costs and replace a lifetime of income you can no longer earn. The single most important detail is the definition.
Any occupation vs own occupation
- Any occupation: pays only if you can’t work in any job suited to your education, training and experience. Harder to claim, cheaper premium. This is the only TPD definition allowed inside super.
- Own occupation: pays if you can’t work in your own specific occupation. Easier to claim, more expensive, and generally only available outside super (since 1 July 2014).
How much cover?
A rule of thumb is enough to clear your debts, cover future medical and care costs, and provide an income buffer for the years you would have worked. That’s usually a larger figure than the default TPD in your super.
Frequently asked questions
What’s the difference between any and own occupation TPD?
Any-occupation pays only if you can’t do any job suited to your skills (harder to claim, cheaper). Own-occupation pays if you can’t do your specific job (easier to claim, dearer). Only any-occupation TPD can be held inside super.
Is a TPD payout taxed?
Outside super it’s generally tax-free. Inside super, if the benefit is released before your preservation age it can include a taxable component, so the net amount may be less than the sum insured.
How much TPD do I need?
Enough to clear debts, fund medical and care costs, and replace the income you’d have earned for your remaining working years - usually well above the default cover in super.
Not sure which fund is right for you?
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