We put every effort into ensuring information on Finder is accurate. This article was reviewed by Karen Eley from our Editorial Review Board as part of our fact checking process.
What you need to know
Total and permanent disability (TPD) insurance can pay you a lump-sum (as high as $5 million) if you are no longer fit to work.
TPD is designed to cover you if you get sick or injured and become permanently disabled.
Finder research of 14 brands found 12 that offer TPD cover. Often it is an optional cover, meaning it must be added to a life insurance policy. Check out our life insurance glossary for more clarity.
What does TPD insurance cover?
TPD insurance covers you if you become totally and permanently disabled and are unable to work due to those illnesses or disabilities. It is designed to help cover medical expenses and ongoing debts and bills that you'd struggle to pay if you were no longer able to work. There are two different types of TPD cover:
Your own occupation
You can claim it if you're unable to work again in the job you did before your disability. This cover is typically more expensive and only available outside super.
Any occupation.
This cover can be claimed if you can no longer work in any jobs suited to your education, training or experience. This cover is usually cheaper and less likely to pay out because say, for example, that you were previously a surgeon before disablement, you may still be able to work as a GP or doctor.
Compare TPD insurance in Australian life insurance policies
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You may already have TPD
According to ASIC, about 9 million Australians hold TPD insurance and more than 4 in 5 (86%) do so through their super fund.
Finder survey: What prompted Australians of different ages to take out TPD insurance?
Response
None of the above
31.87%
Having a baby
24.18%
Buying a home
18.68%
Starting a new job
16.48%
Getting older (but not retiring)
15.38%
Getting married
12.09%
Starting my own business
6.59%
Moving home
2.2%
Buying a car
1.1%
Retirement
1.1%
Source: Finder survey by Pure Profile of 1110 Australians, December 2023
How does TPD insurance work?
1. A situation forces you to stop working
Common examples include loss of sight or hearing.
2. Your insurer assesses your claim
It'll look at your injury or illness and decide whether or not you may return to work.
3. Receive your lump sum payment
The payment is designed to cover medical costs lost income, help pay off debt and potentially allow you to adapt your home to your needs.
How much does TPD insurance cost?
The average cost of TPD insurance is $15.29 per month. However, the fee you pay will depend on factors such as your age, gender, occupation, lifestyle choices and health. If you're a "blue collar worker", your premiums are typically a little more than "white collar workers" because your job generally involves more risk. Similarly, women typically qualify for lower premiums because they live longer than men.
TPD insurance costs will also depend on how big a TPD benefit you need. For instance, someone looking for a $500,000 lump sum will pay a larger fee (premium) than someone with a $200,000 payout policy.
Average prices were taken from a sample quote of all policies available on Finder's quoting engine. Details of the quote were for a 35-year-old non-smoker.
Age. This is one of the most important factors to affect your premium. TPD insurance premiums are generally stepped, which means as you get older, your premium gets more expensive each year.
Gender. Women typically qualify for lower premiums because they live longer than men.
Occupation. Your job affects how much you'll pay for cover. The more dangerous the job the more you'll pay for TPD cover.
Family medical history. Insurers take into account a range of personal situations including your family's medical history.
Current health indicators. Your premiums can be affected by a range of health indicators including your blood pressure, cholesterol and red blood cells.
Lifestyle choices.If you smoke, drink or participate in high-risk activities on a regular basis, these factors are also taken into account when calculating your level of risk to the insurer.
What are the benefits of TPD insurance?
Some TPD insurance benefits and features you should be aware of include:
Total disablement benefit. This is the benefit that's paid if you're disabled due to an injury or illness and are unable to perform work duties.
Partial disability benefit. This is the amount that is payable in the event of partial disablement, for example, loss of 1 arm, 1 leg or sight in 1 eye.
Buyback option. If your TPD cover is part of your life insurance, when a TPD claim is paid, the amount will be deducted from your life cover amount – a buyback option lets you reinstate that amount.
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.
Guaranteed future insurability. This feature allows you to increase the coverage of your policy during important life events, such as marriage, children or mortgage, without needing to undergo another medical examination, even if 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.
Yes, it often is. However, it's not available with every super fund so it depends on which one your employer offers. If you want to check the level of cover provided by your super fund, you can look at your member statement or contact your super fund directly.
Pros and cons of TPD insurance inside super
TPD cover is sometimes included in the superannuation you receive from your employer. However, there are a few pros and cons of getting TPD insurance inside super.
Automatically deducted premiums so you can "set and forget".
Premiums can be funded from your super balance, therefore not impacting your cashflow (budget).
Cons
The premium costs eats into your retirement savings.
There's a tougher, and often more drawn out, approval process for claims.
You can't get "own occupation" cover, which can restrict your ability to be eligible to make a claim.
Why you can trust Finder's life insurance experts
You pay nothing. Finder is free to use. And you pay the same as going direct. No markups, no hidden fees.
You save time. We spend 100s of hours researching life insurance so you can sort the gold from the junk faster.
You can trust us. We say it like it is. We aren't owned by an insurer and our opinions are our own.
Life insurance glossary: Key terms to know
A rundown of the tricky definitions for life insurance. Plus, what to look for when you're comparing.
Beneficiary
The person you've nominated to receive your life insurance payment if you pass away or become terminally ill. You can nominate anyone as your beneficiary (although you can't nominate anyone as a beneficiary if the policy is owned via your super). There can be more than one beneficiary and each beneficiary can receive different amounts.
Children's insurance
Covers your child for death, terminal illness or a serious injury or illness that's specified in your policy. Typically, children's cover needs to be added as an optional extra.
Finder looked at 16 policies on our database and found just a few give you the option of adding a child to a policy.
Cooling-off period
The amount of time in which you can cancel your policy after signing up – and get a full refund of any premiums paid. The vast majority of insurers offer a cooling-off period of up to 30 days.
Counselling benefit
Some insurers will pay costs for grief counselling sessions for you or your partner. Counselling benefits usually have a limit of around $1,000. It can be claimed after a death or terminal illness claim.
Exclusion
An exclusion is any specific risk or event that you can't be covered for under your policy. Insurers can apply exclusions to certain pre-existing medical conditions. For example, they may not cover any claims related to mental health.
Exclusion period
How long you'll have to hold your insurance before a policy exclusion turns into a claimable event. For example, it's common for suicide to have a 13-month exclusion period.
Fully underwritten
With a fully underwritten life insurance policy, your application is assessed upfront. Whereas a policy that isn't fully underwritten is assessed at the time of a claim.
Pays a lump sum benefit – usually up to $15,000 – so your loved ones can meet the cost of your burial or cremation without using their own money.
You could look for a funeral policy offering a guarantee that any payout won't be less than the total you've paid in premiums. This is sometimes called a premium guarantee.
Guaranteed acceptance
You can get insurance without having to answer any health questions, or take a medical exam or blood tests.
Guaranteed acceptance policies, also known as auto-acceptance policies, will have an age eligibility requirement. This can range between 16 and 80 years of age.
Guaranteed Renewability
The insurer lets you renew your coverage each year, as long as you keep paying for your premiums. Many life insurers in Australia offer this peace of mind.
Income protection insurance
Income protection insurance pays a monthly payment if you need to take time off work due to an accident or illness. Many insurers will pay up to 70% of your pre-tax income.
Inflation protection
This ensures your premiums keep up with inflation so that your amount of cover is worth as much by tomorrow's dollar. You can ask your insurer to switch off this automatic policy feature, but it could leave you underinsured.
Interim accident cover
Insures you while your life insurance application is being underwritten or waiting to be approved. Typically, interim insurance will cover you for up to 90 days.
Joint life insurance
A policy that covers 2 people, but it pays out one time. A lump sum goes to the other policyholder in most cases.
Joint life insurance can be a cheaper option than two single policies. But it's potentially complicated if a relationship ends.
Level premium
Your insurance generally won't increase in price as you get older, though it will increase in line with inflation. You'll usually pay more in the beginning but they offer more certainty over time. Only a few direct insurers in Australia offer level premiums.
Loading
Essentially, you have to pay a bit more to cover your pre-existing health condition, job or hobby in your policy. Any loadings will be offered during the life insurance application process.
Minimum cover
The smallest amount of insurance (or, sum insured) you can take out. Many insurers in Australia set a minimum cover level of $100,000.
Maximum cover
The cover limit offered by an insurer. It's the most you can be paid out after a claim. Maximum cover limits can range from $500k to $15 million. Insurance company, TAL told Finder it had "no set limit" for a payout.
Maximum entry age
The maximum age you can be to apply for life insurance. Common age caps are 64 or 65, but some providers go up to 70+.
Some insurers will require you to have a physical examination before you're approved; others will just need you to answer questions about your medical history on your application form.
Monthly benefit
A regular monthly payment if you're unable to work due to illness or injury. It's designed to replace a portion of your regular income. Monthly benefits are a common feature of income protection policies.
Mortgage protection insurance
Insurance that can cover your mortgage repayments if you have a serious illness or pass away. Mortgage protection will only cover your mortgage repayments, not all the other bills you'd need to pay if you lost your ability to earn an income.
Personal accident insurance
Insurance to replace your income if you are temporarily unable to work after an accident. This cover can be bought as a standalone policy. Keep in mind it won't cover you if you get sick and can no longer work.
Personal insurance
An umbrella term for the following 4 core types of life cover: Life insurance, Total and permanent disability (TPD) insurance, trauma insurance and income protection cover.
A medical condition you have, or have had, prior to taking out life insurance.
You may be able to get life insurance that includes cover for a defined medical condition. It's likely to cost you more. However, if an insurer thinks your condition is too high risk or isn't under control, they'll exclude it from your policy.
Premiums
The amount you pay an insurer for your cover. Premiums can be paid weekly, fortnightly, monthly or annually.
A policy option that lets you stop paying premiums entirely. You will typically lose all your cover while your policy is suspended.
Not all life insurance policies include a suspension of cover benefit. Check with an insurer directly.
Premium freeze
A premium freeze lets you stop your premiums from increasing as you age.
It's only available with stepped premium policies because the cost rises with age. By activating a premium freeze, your level of cover will drop over time.
Retail life insurance
Buying life insurance through a broker, who will give you tailored advice on securing cover. Buying a retail policy is one of 3 ways to get life insurance in Australia. The others are directly with an insurer or through your superannuation.
Salary continuance
You can receive up to 75% of your regular earnings each month to cover general living expenses if you can't work due to an accident, illness or injury.
Salary continuance insurance is held within a super fund, and you'll pay your insurance premiums from your super balance rather than directly from your bank account.
Typically, to be classed as a 'non-smoker' you'll need to be free of any smoking products for 12 months, but this can vary between insurers.
Stepped premiums
How much you pay for your policy increases each year by a certain percentage. Most policies in Australia have stepped premiums. Yearly increases can range from 2% to 7%.
Term cover
A type of life insurance that provides a set amount of cover for a set amount of time (or, 'term'). The maximum cover offered by term policies can range from $100,000 to $1 million.
Terminal illness benefit
An insurance which pays out a lump sum if you're diagnosed with an illness which cannot be cured, such as advanced cancer. Benefits can start on the smaller side, and reach as much as to as much as $25 million in Australia. It's usually included with a life cover policy.
Total and permanent disability (TPD)
An insurance that pays a lump-sum (as high as $5 million) if you get sick or injured and become permanently disabled. In most cases, TPD cover is available as an add-on when you take out life insurance.
Trauma insurance
A type of insurance that pays out if you are diagnosed with a critical illness or suffer a life-changing injury that's listed in your policy. Examples can include cancer, heart attack and stroke. Trauma insurance pays up to $2 million as a lump sum.
Underwriter
When you apply for cover, the insurance underwriter assesses your level of risk and determines whether the insurer should offer you cover, as well as under what conditions that cover should be offered.
You could check to see if a policy has been underwritten by a major insurer, backed by many years of experience.
Why compare life insurance with Finder?
You pay the same price as buying directly from the life insurer.
We're not owned by an insurer (unlike other comparison sites).
We've done 100+ hours of policy research to help you understand what you're comparing.
Or speak to a broker to help you find tailored cover
Frequently asked questions about TPD insurance
When determining how much TPD insurance you may need, a very rough rule of thumb is to take out coverage that is 10 times your annual salary. Some things you should consider include:
Your debts. If you have a mortgage, loan or any debt, you need to factor that into the amount of TPD cover you need.
Your level of health insurance. If your health insurance won't cover all the medical bills should you become permanently disabled, factor the costs into your TPD coverage.
Your super fund. If you have TPD insurance inside super, you might be able to receive a payout through your super as well.
Family assistance. If you or your partner become disabled, who will take care of the home duties? You might need to consider budgeting for family assistance.
The level of coverage you want. Are you willing to sell your home or other assets and move somewhere cheaper? If not, then you want enough coverage to pay for all your debt repayments.
However, everyone is different so you should consider your own circumstances and seek advice on the appropriate level of cover for you. A financial adviser could support your decision making if required.
Yes, you can add TPD cover onto your existing life insurance policy to have a more comprehensive coverage.
If you're comparing a new deal, be sure to check and see if the TPD cover is offered as a standalone product or an add on.
Figuring out whether you want TPD on its own or bundled with life insurance essentially boils down to the risk you're willing to take, based on your personal circumstances. It can make cover cheaper, and if you're sure to calculate your living expenses, it can still leave your loved ones with more than enough to pay off debts, home loans and other everyday living costs.
Generally TPD payouts won't impact your Centrelink payments, particularly if that insurance is held within super and you are under pension age. However, a TPD payout is a form of income and you should always report any changes in circumstances to Centrelink and seek advice from it directly.
You may be able to, depending on the specifics of your policy. Some insurers will pay out for income that's lost if you can only work at a reduced capacity because of sickness or injury.
Also, some policies provide partial payment if you suffer certain disabilities. For example, after the loss of limbs or loss of sight.
Taking out insurance through a superannuation fund is a common option and if you have set up your own SMSF then your fund can own your TPD policy.
In the event of a claim, the benefit is paid to your SMSF and you must meet the guidelines for a superannuation TPD policy to allow you to withdraw the benefit payment before your retirement. These payments may also incur a tax liability.
Depending on the policy you choose, you may be required to be unable to work because of an illness or injury for at least 3 to 6 months, before you start receiving any benefit payouts.
If you're no longer actively employed or are doing work that's unpaid but still your full-time activity, you may be eligible for 1 of the following types of TPD insurance:
Home Duties. This policy type is designed specifically for homemakers and offers cover for people for whom domestic duties are generally their full-time activity. Even if homemakers do not earn a salary, they still perform a host of vital duties in and around the home and to assist the rest of the family. Under a Home Duties definition, if you're no longer able to perform your regular domestic work you may receive a benefit. This type of cover can help with things such as home maintenance, childcare and the cleaning and cooking.
Non-working TPD. This option is generally not available when you first take out TPD cover but then becomes available when you reach a certain age. However, most working TPD policies will convert to this definition on your 65th or 70th birthday. Under this definition, you will be eligible to receive a partial benefit if you lose your ability to perform a specified number of daily living tasks or suffer other specific injuries, covered below.
Modified TPD. This is a "working" TPD policy where you add on features of a "non-working" policy. These may let you claim on disabilities outside the normal scope of TPD policies when you are still working age.
This is a little more tricky. In order to trigger a payout, TPD policies require the policy owner meets the criteria of total and permanent disablement as a result of their illness or injury.
Meeting the criteria
Depending on what's decided on when you apply:
You will need to be unable to work for a consecutive number of months in your own occupation (easier to prove).
Or unable to work for a consecutive number of months in any occupation (harder to prove).
Ongoing care is also required.
The person claiming will need to seek the ongoing care of a medical professional. The insurer must also deem that the severity of the sickness or illness means that the insured is unlikely to ever work in regular remunerative work for which they are fitted either by education, training or experience. For an increased premium, applicants can elect to take out cover that will provide a benefit if they are unable to return to their own occupation.
When looking for TPD cover, you have to disclose any relevant information requested by the insurance provider to allow them to assess your situation. This is legally binding and you must disclose any relevant, known information to avoid the legal consequences of not informing the underwriter about information that may affect the policy.
In most cases only intentional, self-inflicted injuries will be excluded from receiving a successful claim payment.
When your policies are linked and you make a successful claim on your TPD policy, the benefit you receive will be deducted from your life insurance amount. If you don't want your life insurance to be affected by a TPD claim, you can choose a double TPD policy, a TPD buyback benefit or a standalone TPD policy.
You can find TPD policies which will cover you for illnesses or injury you incur while you're travelling overseas or living overseas for an extended period of time. Just make sure you check the conditions of your particular policy with your insurer.
In order to qualify for the NDIS, you need to be a resident, permanently disabled and under 65. While the scheme is a great option if something bad happens, it often doesn't cover all your needs and expenses, which is where TPD insurance comes in.
While income protection insurance provides you with a sustained income if you're unable to work due to illness or injury, TPD insurance comes in the form of a lump sum payment, helping you take care of any debts and living expenses, as well as any immediate medical bills.
Trauma insurance, on the other hand, pays for critical illnesses and incidents on specifically listed medical conditions.
Karen Eley is the founder of Women Talking Finance, which provides money coaching and financial literacy and education services. An experienced and former financial adviser who has worked in financial services industry for 22 years, Karen is a Certified Money Coach (CMC), holds a Bachelor of Accounting and an Advanced Diploma in Financial Planning and CFP.
Gary Ross Hunter was an editor at Finder, specialising in insurance. He’s been writing about life, travel, home, car, pet and health insurance for over 6 years and regularly appears as an insurance expert in publications including The Sydney Morning Herald, The Guardian and news.com.au. Gary holds a Kaplan Tier 2 General Advice General Insurance certification which meets the requirements of ASIC Regulatory Guide 146 (RG146). See full bio
Gary Ross's expertise
Gary Ross has written 718 Finder guides across topics including:
Any occupation cover and own occupation cover are two types of cover that apply to Total and Permanent Disability Insurance (TPD) and Income Protection Insurance
Is TPD insurance tax-deductible? Do I need to pay tax if I receive a payout? Find out how TPD insurance is treated.
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You pay nothing. Finder is free to use. And you pay the same as going direct. No markups, no hidden fees.
You save time. We spend 100s of hours researching life insurance so you can sort the gold from the junk faster.
You can trust us. We say it like it is. We aren't owned by an insurer and our opinions are our own.
