Total and Permanent Disability (TPD) insurance – which can be included in your Superannuation Fund – and income protection insurance can provide you with a financial safety net in the form of financial support in case of illness or injury.
While income protection insurance offers regular payments to replace your income in case you cannot work, TPD insurance offers a lump sum payment if you are permanently and totally disabled and if it affects your life and leaves you unable to work.
However, your personal circumstances will determine how suitable the different insurance products are for you. For advice and assistance, the TPD Helpline can help you sort out the level of insurance you need.
Importance of Both TPD & Income Protection
Being unable to return to your job due to a permanent disability, accident or illness could devastate you, especially if you are uninsured. Suddenly your world is turned upside down, and there is no income to support you and your family, to pay bills and a mortgage or rent.
What do you do? Sick leave and workers’ compensation can provide a certain amount of relief. In this case, income protection insurance and TPD insurance claims can provide a benefit payment and lessen most of your financial stress.
Income Protection Insurance Won’t Replace TPD
While income protection insurance pays the better part of your wages, TPD cover provides a lump-sum payment in the event of total and permanent disability. Still, it isn’t a replacement for TPD insurance.
If your income protection policy has a benefit period of just two to five years, you may be advised to buy higher levels of TPD cover. Also, combining both insurances with the same insurance company often brings discounts on the cost of premiums.
Talk to the TPD Helpline or your chosen insurance broker for information on buying both types of insurance for adequate protection.
Claiming on Both Income Protection & TPD
You can claim TPD and income protection insurance if you are eligible for both. However, it is important to check the terms and conditions of your policies carefully to ensure you are not limited in how much you can claim.
Remember that if you are only temporarily unable to work, TPD insurance is not designed to cover you. If you are temporarily disabled, you will need income protection benefits in insurance policy.
How You’re Paid Makes a Key Difference
TPD insurance and income protection insurance can both offer you a level of financial support should you suffer an injury or illness and cannot work.
However, the key differences in these insurance products are the circumstances of your disability and the way your benefits are paid as per the following:
- For example, up to 70 per cent of your regular income is paid monthly with income protection insurance when you cannot work after the end of your waiting period of between 14 days and two years.
- Generally, TPD insurance will pay a lump sum benefit if you are totally and permanently disabled, and it’s unlikely you’ll ever work again in any job or your own occupation. The benefit can sometimes be as high as $800,000 or more.
TPD and Income Protection Premiums
The cost of TPD and income protection insurance work can vary depending on a number of factors, such as your age, occupation, and health history. It is important to shop around and compare quotes from different insurers to get the best deal.
TPD: The Definitions
Be aware there are four potential TPD definitions. You should know which one affects you according to your Product Liability Statement (PDS):
- Own occupation: If you can no longer return to work in your own occupation permanently due to total and permanent incapacity, you receive a lump sum benefit.
- Any occupation: If you are evidently unable to ever work in any occupation reasonably suited to your education, training, or experience, you will receive a payout.
- Home duties: Should you be totally and permanently disabled and never likely to return to normal domestic duties – laundry, cooking family meals etc., you will receive a lump sum benefit.
- Modified (activities of daily living): If you are totally unable to perform two of five normal daily activities – dressing and undressing, bathing, eating and drinking, e.g., you will receive a lump sum TPD payout.
TPD and Income Protection Comparison Table
An example of benefits paid by superannuation funds.
| INCOME PROTECTION | TPD INSURANCE | |
| Benefit | 70 per cent of your regular wages paid monthly. | Lump sum payment. |
| Eligibility | Cannot work due to illness or injury. | Cannot work in your current or potential occupation. Totally & permanently disabled. |
| Waiting Period | Between 14 days and up to two years. | Generally three to six months. |
| Benefit Period | From two to five years or to age 65. | TPD definition usually changes at age 65. |
| Premiums | Based on premium type, occupation, gender, age, health status, waiting period, benefit period, and monthly benefit. | Based on gender, age, gender, health status, disablement definition, occupation, benefit amount and premium type. |
| Taxation | Benefits are normally taxed as income, and premiums are generally tax deductible. | Premiums are generally not tax deductible. Lump-sum payments are generally tax-free due to not being considered as income |
| Benefit Use | Ongoing expenses covered during your disability. | Ongoing financial support for medical expenses and debts. |
Contact the TPD Helpline Australia Today
TPD assessments consider your entire well-being, including your physical, psychological, and other health conditions, and we’re here to help shine a light on how your doctors and GP’s assess your TPD eligibility so you can make TPD insurance claims and receive your benefit payments.
Thousands of Australians are unaware of their rights and TPD insurance claim benefits even though they are eligible. The TPD Helpline assists people all over Australia to claim their superannuation TPD benefits. Call us at the Helpline today on 1300 679 222 or fill in the online form.
