TPD Cover Quote Estimates
Total disability Insurance (TPD)
Total and permanent disability insurance (TPD) provides a lump sum payment if you are unable to return to work due to total and permanent disablement in the opinion of two medical doctors (usually your own and the insurance companies). You can either have an own occupation or an any occupation TPD policy.
The payout bar is lower if you choose an “own” occupation policy, which means that the policy is more expensive. The criteria is you are totally and permanently disabled and cannot work in any capacity in your own field of work in which you specialise and for which you are trained.
Any occupation is a little bit harder to claim on, but the term “any occupation” can be a bit misleading as well. The definition states if you become totally and permanently disabled and cannot work in any capacity in ANY occupation based on your previous education, skills, training or experience.
Let’s take the example of a neurosurgeon who develops Parkinson’s disease and can no longer operate on patients. Under an “any occupation” definition he can no longer work as a neurosurgeon and this would trigger a payout. Under an “any” occupation definition he could work as a consulting doctor and not.
Own occupation TPD through super
According to super fund legislation you cannot hold an own occupation policy through super, because it will not satisfy one of the conditions of release, so default cover through super is set at any occupation. However, there is an option to “superlink” your policy where you pay a small amount outside of super (the “own” component) and the rest inside super (the “any” component) so that if you had to claim the amount can get released from your super.
TPD and tax
TPD benefits are typically tax exempt when the policy is personally funded (self-owned) for personal protection purposes. However, if the TPD benefit is funded via superannuation tax may apply.