BACK to BASICS: What is TPD insurance?

TPD insurance stands for Total & Permanent Disability insurance. TPD insurance is “modify your lifestyle” insurance. It provides a lump sum payment if you unable to return to work due to serious injury or illness. It is designed to assist with medical costs as well help pay for home modifications, long-term care or to take a new path if you can’t return to work permanently.

A permanent disability can place enormous strain on a family’s financial position. Not only can you be left without an income, but there are often additional and perhaps unexpected costs that come with being disabled, some of which can remain for many years.


What is TPD insurance?

Often abbreviated to TPD, Total and Permanent Disability insurance is designed to help you and your family cope financially in such a situation — paying you the insured amount if you can no longer work due to sickness or injury.


Case study: Brett & Nadia

Brett, aged 39, was a self-employed IT consultant earning $100,000 pa. His wife Nadia, 35 was a stay at home mum, who enjoyed looking after their three children aged eight, six and three.

After feeling unwell for several weeks, Nadia was told by doctors that she had Multiple Sclerosis. A year later, she was totally confined to a wheelchair and required 24-hour care.

If Nadia didn’t have TPD insurance, Brett would have faced the difficult decision of whether to sell the business to stay home with Nadia and the children, or whether to hire a full-time nurse to look after his wife — neither of which the family could really afford.

However, Brett and Nadia did have TPD insurance policies in place, and because Nadia qualified for a benefit they were paid a lump sum of $1.2 million.

This money covered the costs of hiring a nurse to look after Nadia and help out with the children while Brett was at work. The couple were also able to pay off their mortgage, make the necessary renovations to the home, and put some money aside for future education costs for their children.


Do I need it?

Ask yourself some questions:

  • Do you have a partner and/or dependents?
  • Do you have any other financial commitments that rely on your income?
  • Would you struggle to afford to pay someone to look after you if you needed long-term care?

If you answered yes to any of the above, you may benefit from TPD insurance.

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How will TPD insurance help me?

The financial support provided by TPD insurance can help you rebuild your life, and maintain your standard of living, in the wake of a permanent disability.

A TPD insurance benefit may help you:

  • Cover your out-of-pocket medical bills and rehabilitation expenses
  • Pay for any ongoing assistance or care you need
  • Provide for any additional housework or child care costs
  • Allow you to modify your living arrangements if you need to.

Some policies may require that you are permanently unable to work in any occupation, regardless of your employment background. Others may be less strict, and only require that you are unable to work in any occupation for which you are reasonably suited by training, education or experience.

The most flexible policies may pay a benefit if you are permanently unable to work in your own occupation only — recognising that you may not be able to earn as much in any other occupation.

Typically, the more flexible the policy, the more it will cost.

To make sure your TPD policy suits your needs and budget, you should weigh up your options with your financial adviser.


What are the chances?

There are over 2 million Australians of working age with a disability. Of these, 59% are permanently unable to work*.

To ensure you and your family’s financial future are protected, it is important to speak to a financial adviser about TPD insurance.

Chris Black is an award-winning financial planner based in Toowoomba who specialises in personal insurances including life insurance, income protection, total permanent disability and trauma insurance. To discuss your insurance protection needs, please email us at or book online.


Written by Emma Linton Doig, Practice Officer at Fortress Financial Solutions.


*Australian Social Trends, March quarter 2012.

Information on this site may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product.

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