Total and Permanent Disability (TPD) insurance is a lump sum payable in the event you are disabled and can never work again. Like with most financial products though, there are great differences between products and providers – for TPD the one that stands out the most is the definition of occupation covered.
A standard TPD definition, which is likely to be the case in your default TPD cover in super, would read something like this:
“...as a result of their disability, they are completely unable to work at any occupation they are reasonably suited to by way of education, training or experience”
So, to simplify; you get paid if you can never go back to work in any job you are educated, trained or experienced in – not just your current job.
In contrast, a standard OWN occupation definition reads like this:
“...sickness or injury which has prevented the Insured Person from working in their own occupation (the occupation engaged in immediately prior to the event giving rise to the claim).”
Simply – it covers the specific role and duties that you do.
One example I use to explain the difference is Indiana Jones :
Part of his role is administrative – he is a lecturer at a university.
Part of his role is high stress field work – running from boulders and other such activities.
If he suffered a back injury, he may still be able to do anything he is reasonably qualified and experienced in – i.e. a lecturer – so Any occupation TPD would not pay out.
It’s easy to picture Indi' applying for TPD but I think real world examples may give you a better idea. (These are actual claims that were not paid under an ANY occupation).
A CFO suffered a nervous breakdown and had a year off work. She was deemed able to work in lower level roles within her industry such as managing data analytics or administration but couldn’t work in senior roles with high stress and responsibility.
Because she could perform a lower role than she previously held, this CFO was not eligible for a TPD payout.
A police detective suffered an elbow injury that meant he was off work. He was then diagnosed with PTSD and after a year or so, it was determined he would never return to work as a police officer.
The claim was submitted on an Any Occupation TPD policy. The detective had been in the police force for 8 years, but when he was 17 he had completed a mechanics apprenticeship. During that time, one of his duties was to come into the office and make new appointments for people, or ring other garages/suppliers to try and procure parts.
Although it was agreed he could no longer work in the police force due to PTSD, and couldn’t do manual work due to his elbow, it was determined that he was suited to be car parts procurer or import/exporter of car parts.
The case went to court and the insurer won the case – those were jobs he was suited to, due to his education training and experience.
A hospital-based nurse suffers a permanent injury which means she can no longer be on her feet for any more than short periods of time.
She has an Any Occupation TPD policy and lodges a claim. The claim was denied because although she couldn’t be a hospital-based nurse any more, she could work sitting down and use her nursing knowledge in another role such as working for the health department, health insurer (or the like) giving advice over the phone.
There’s lots of things she could do – she just couldn’t do her OWN job.
In all of the above examples, the claimant would have been declined under an Any Occupation assessment, but under an Own Occupation assessment, the claim is likely to have been payable.
These three cases really highlight the importance of having stronger definitions on your cover.
If the ANY occupation definition is not enough for you, please get in touch and I can go over your options.
Side note: the COULD BE clause.
Recently, a major Superannuation fund which offers insurance changed their definitions on their TPD Cover (being ‘Group’ cover they can do this whenever they want).
This definition expanded on the ANY occupation from above – adding in any occupation the life insured could be any retrained or re-skilled in. When trying to claim on that cover, that is a huge hurdle to get over.
Any information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.