Features of Total and Permanent Disability Insurance

Different policies will offer a range of built-in benefits and additional options. The key features of total and permanent disability insurance will vary between insurers, so it is essential that you read the PDS of the insurer’s policy and conditions closely.

Features and benefits of TPD insurance generally include:

Death benefit

A benefit amount may be payable in the event of your death. Given that your TPD cover is a stand-alone policy.

Partial disability benefit

A portion of the sum insured on your TPD insurance may be payable in the event of a permanent loss of the use of one arm, one leg, or sight in one eye.

Your choice of ‘own occupation’ or ‘any occupation’ definition

Make sure that you compare the definitions of total and permanent disability used in your insurance policy, as not all insurance companies will define them the same way. From there, you can choose the definition of your own occupation or any occupation that suits your personal circumstances best.

Guaranteed future insurability

This feature allows you to increase the coverage of your policy during important life events, such as:

  • Marriage
  • Children
  • Mortgage

Without needing to undergo another medical examination, even though your health situation has changed.

Indexation benefit

Sum insured will increase annually in line with the Consumer Price Index (CPI) to keep up with inflation.

Loss of independence feature

In some cases, the lump sum payment available with TPD insurance can convert to a loss of independence payout, based on the insured’s ability to care for themselves.

Premium freeze option

Some insurers offer this option where you can choose to retain your current annual premium under a stepped style. When you reach a certain age and it will reduce the insured amount gradually.

Buy back option

This option is only available when your TPD cover linked to your existing term life insurance. When a TPD claim is paid, the amount is deducted from your life cover amount – buy back option will allow you to reinstate that amount.

TPD insurance is similar to income protection insurance. You will be financially taken care of if you are unable to work due to an illness or injury. However, there are a number of differences between the two types of insurance, which are:

TPD InsuranceIncome Protection Insurance
TPD insurance is designed to provide protective cover in the event of a long term disabilityIncome protection insurance provides coverage for  both short and long term disabilities
TPD insurance benefit comes in a form of lump sum paymentIncome protection insurance provides an ongoing monthly benefit to serve as a replacement  income for a specified benefit period

Total and permanent disability insurance can be considered as additional coverage you can include in your existing insurance portfolio. Either as a standalone policy or as a rider if you are looking for comprehensive protection for you and your family.