Total and Permanent Disability (TPD) Insurance

If you become totally and permanently disabled due to sickness or injury, NobleOak will pay you the agreed cover amount as a lump sum. You can apply for an amount up to your Life Insurance sum insured, to a maximum of $5 million. As TPD is an option with Life cover, the Life cover amount will reduce by the amount paid for a TPD claim (as will trauma cover if that’s also taken as an option with life cover).

Note: If your occupation is Home Duties, the Domestic Duties definition for TPD will apply.

We’ll reimburse the cost of you or your spouse/partner engaging a financial adviser, up to $5,000, to prepare a financial plan if we pay a TPD Insurance Benefit more than $200,000. You must send us suitable evidence of the paid invoices within 12 months of the claim payment. The financial adviser must be operating under an appropriate Australian Financial Services License. This benefit is payable once only.

You can fix the cost of your cover at any time by writing to us with a request to freeze the premium amount. This means that:

• Your future premiums will be fixed at the amount you were paying on the date of notification; and
• Each year your cover amount will be adjusted to the amount of cover that can be purchased for the frozen premium.

You can write to us at any time to end the Premium Freeze Benefit and the premium freeze will end on the next anniversary of your cover.

Total and Permanent Disablement (TPD) Insurance is a popular and important type of cover that is often purchased as an optional extra with Life Cover.
While Life Cover provides financial protection for your family in the event of your death, and Income Protection Insurance can provide cover if you can’t return to work temporarily, TPD Insurance is there to help you if you become severely disabled and unable to ever work again.

Having this type of cover in place can help ensure your family will not be left with a major financial burden. For example, a TPD Insurance benefit may be used to ensure:

• major debts such as the home mortgage, credit cards and personal loans can be paid out
• you can afford to move home or make modifications to your existing home
• you can pay for ongoing care and medical costs.

How TPD Cover can help

At the age of 45, Bernard suffered a severe stroke. As Bernard experienced significant permanent and residual medical effects, he was deemed unable to ever return to work in his previous occupation as an accountant.

Fortunately, Bernard had included TPD Insurance with his Life Cover. He made a claim and received a payment of the full sum insured of $1.5 million.
This money allowed Bernard to pay off his mortgage, invest funds to ensure an ongoing income stream for himself and his family, and complete some modifications to his home to allow him better access with his disability. He also set aside some money to take care of future medical and rehabilitation expenses.

Working out how much Life Insurance you need in the event of a catastrophic injury or illness can be a tricky business. By making sure you have enough cover to meet your existing needs, as well as the cost of treatment and rehabilitation, you can help make the road to recovery a smoother one for you and your family.

NobleOak Total and Permanent Disability (TPD) Insurance is offered as an optional extra with NobleOak Life Cover. You can apply for an amount up to your Life Cover sum insured, to a maximum of $5 million. This is paid as a lump sum in the event that you became totally and permanently disabled due to a serious injury or illness. The amount of cover you would need depends on your individual situation, and is affected by things like your income, your dependants, your debts and assets.

How your income could be impacted

How much do you currently earn and how much do you and your family rely on your income? Even if you don’t earn an income, your total and permanent disability could have a big impact on your family.

TPD Insurance can help provide for your future cost of living, which could be significantly different from the one you currently enjoy. If you become seriously disabled, your partner may be forced to give up work to help care for you, which could take you from being a two-income family to having no income stream at all.

If your partner continues to work, you may need to pay for a carer to help you to perform simple daily activities like getting dressed and out of bed, toileting and preparing meals.

How would you pay any debts

If you have a mortgage, you may want to make sure that you can pay it off and clear any other outstanding debt such as credit card and car payments. Particularly, where you do not want to risk losing your family home or putting your family under financial stress if you were unable to manage your mortgage or loan repayments.

Caring for your dependants

How many children you have and how old they are can have a significant impact on the amount of TPD Insurance you may need. The younger your children are, the longer they will be financial dependant on you. Factor in any regular and future expenses, such as school fees and out of school activities, health insurance, annual holidays and incidental expenses, on top of the cost of day-to-day living.

Paying for rehabilitation costs

If you were permanently disabled and unable to work again, your TPD payment would ideally help cover the cost of long-term care or medical expenses, as well as possibly modifying your home. These expenses can easily run into the hundreds of thousands of dollars, which is a burden you will not want to be worrying about when you are trying to focus on making a full recovery.

The right insurance for you

Having the right amount of TPD Insurance for your needs is crucial. Too little could result in a nasty surprise if you need to claim, while too much could mean you are paying more than you need to. Contact NobleOak to speak to one of our Insurance Specialists to learn more about getting the right TPD Insurance for you.

If the ‘any occupation’ definition applies to your TPD Insurance, then you are covered if your disablement makes it unlikely that you will ever again engage in any gainful employment for which you are reasonably qualified by education, training or experience.

NobleOak gives you the option of the ‘any’ or ‘own’ occupation definition when applying for your TPD Insurance. The ‘any’ definition makes it harder to qualify for a benefit payment, but the premiums are lower.

For example, Sanjay is a dentist who is diagnosed with Parkinson’s Disease. His symptoms make it impossible for him to continue in his occupation, but he would still be capable of teaching or managing a dental practice. Sanjay had opted for the ‘any occupation’ when applying for TPD Insurance, so he will not receive a benefit payment as he can continue to engage in gainful employment.

If you are seeking Life Insurance and TPD Insurance for your self-managed superannuation fund, then SIS legislation means you must have an ‘any’ occupation definition for your TPD cover.

If the ‘own occupation’ definition applies to your TPD Insurance, then you are covered if your disablement makes it unlikely that you will ever again engage in your own occupation.

NobleOak gives you the option of the ‘own’ or ‘any’ occupation definition when applying for your TPD Insurance. ‘Own occupation’ provides you with the highest opportunity to receive benefits, reflected in higher premiums for this type of cover.

Own occupation TPD Insurance is usually bought by specialised white-collar professions. For example, Patricia is a cardiac surgeon who develops debilitating arthritis in her hands and, as a result, is declared no longer capable of performing surgery. As she has opted for Total and Permanent Disability Insurance using the ‘own occupation’ definition, she will receive her benefit payment, even though she is capable and qualified to go into another line of work, like teaching or management.

Is Trauma Insurance the same as Total and Permanent Disability Insurance?

No, Trauma Insurance is different from Total and Permanent Disability Insurance.

Trauma benefit is paid if you are diagnosed with a serious listed medical condition, regardless of the level of disability that results, or your capacity to work.

Total and Permanent Disability benefit is paid if you become totally and permanently disabled due to sickness or injury and are unable to work again.
For example, if you are diagnosed with cancer, under Trauma Insurance you will receive a payment on diagnosis, but under Total and Permanent Disability Insurance you could only claim a benefit when, and if, the cancer renders you totally and permanently disabled.

What would happen if you suffered a serious illness or injury? Would you and your family manage if you couldn’t return to work?
A serious injury or illness can have a major impact on you and your family’s life and finances. In fact, the financial impact can sometimes be just as hard as if you were to pass away.

Not only do you have your family’s regular living expenses to contend with, such as food to buy, bills to pay and a mortgage to keep on top of, but there can be additional extra expenses related to your disability, such as medical fees, ongoing care, home modifications and special equipment. Assisted care, whether through family members or paid help, can run into hundreds of thousands of dollars.

For you and your family’s sake, it makes sense to be covered for both scenarios.

What do Life Insurance and TPD Insurance cover you for?

Life Cover can be a great form of protection and financial comfort in the event that you were to unexpectedly pass away. It can be used to repay debts, cover your children’s education, and replace future lost income. But it can’t be used if you suffer a serious accident, survive it, and can never work again.

For complete peace of mind, there is cover available to protect yourself and your family from financial hardship in the event that you were to become permanently disabled. Total and Permanent Disability (TPD) Cover protects your ability to provide for your family while you are still around but disabled to the point that you are unable to work. As an addition to your Life Cover, TPD Insurance provides an extra layer of protection for your family.

How does NobleOak TPD Insurance work?

NobleOak’s TPD Insurance is an optional extra on your Life Insurance, providing up to $5 million in cover.

With NobleOak, you can choose from two disability definitions:

• ‘Own occupation’ – you are covered if your disablement makes it unlikely that you will ever again engage in your own occupation.
• ‘Any occupation’ – you are covered if your disablement makes it unlikely that you will ever again engage in any gainful employment for which you are reasonably qualified by education, training or experience.

This means you can obtain cover that best suits your occupational situation and financial circumstances. The cost of TPD Insurance will be higher if you work in an occupation that requires manual work.

When applying for NobleOak Total and Permanent Disablement Insurance, either definition ‘Own’ or ‘Any’ Occupation may be offered.
If the ‘Own’ Occupation definition applies, then your ill-health (whether physical or mental) must make it unlikely that you will ever again engage in your own occupation.

If the ‘Any’ Occupation definition applies, then your ill-health (whether physical or mental) must make it unlikely that you will ever again engage in any gainful employment for which you are reasonably qualified by education, training or experience.

For example, Nam is a surgeon who has lost the use of his right hand and can no longer work as a surgeon. He can, however, continue to work in another capacity, such as research or training.

If he is insured under the ‘Own’ Occupation definition, his premiums will be higher but he will be entitled to his TPD benefit. If he is insured under the broader definition of ‘Any’ Occupation, he won’t be eligible for his TPD benefit.

Most of us – bar a lucky few – rely on our salary to get by. Some live week-to-week, with pay consumed by daily living expenses; others manage to put some of the pay packet towards savings. No matter which camp you fall into, the prospect of suddenly losing your salary is pretty grim.
Could you afford to maintain your current lifestyle if your salary was switched off tomorrow? How would you cope with mortgage repayments, school fees, bills and general living costs? These are the questions that people might face if they suddenly suffer a serious injury or are struck down with a serious illness. Unable to work, and with only a few weeks’ sick leave, their income may dry up quickly.

It’s one of the main reasons why many people take out Total and Permanent Disability (TPD) Insurance or Income Protection Insurance. Question is, which one is right for you? Or, indeed, do you need both?

How you purchase the cover

TPD Insurance is purchased as part an optional extra to Life Cover. This is often referred to as a ‘rider’ product, in that, you cannot have TPD Insurance without Life Cover in place. As TPD Insurance is a portion of your Life Cover, it cannot be higher than your Life Cover.
Income Protection Insurance, on the other hand, is purchased as a stand-alone cover that sits separate to any Life Cover that you might have.

How claims are paid

TPD Insurance pays a once-only lump sum if you are never able to return to work again. On paying out this lump sum, your Life Cover is reduced by the same amount. It’s designed to help you adjust to living with a total and permanent disability. You can choose to be covered only for whether you able to return to work in your own occupation or for any occupation.

Income Protection, on the other hand, pays you a monthly income of up to 75% of your regular income if you suffer a specific illness or injury, regardless of whether you are totally disabled or whether or not you can return to work. You can choose a benefit period of 2 years, or to age 65 – this determines how long you could be paid benefits for.

How you could use your benefit

Given the difference between how claims are paid in TPD and Income Protection Insurance, it may be a consideration to take out both types of cover.
For example, if you became permanently disabled and couldn’t work again, you might use the TPD benefit (a lump sum) to pay off the mortgage and other large debts, while an Income Protection benefit (an ongoing monthly payment) could be used for daily living and therapy costs. In either scenario, the benefit payments would provide greater peace of mind that your expenses could be covered.

When taking out insurance, it always pays to read the Product Disclosure Statement so you know exactly what you’re covered for. This way, there are no surprises in the event that you need to make a claim.

Standard Exclusions

NobleOak’s Total and Permanent Disability (TPD) Insurance only has one standard exclusion being any disability or sickness caused by any intentional self-injury or attempted suicide while sane or insane within 13 months from commencement, reinstatement or increase of the insurance cover (but only to the extent of that increase).

Other Exclusions Specific to You

As well as the standard exclusion listed above, there may also be specific exclusions to your cover relating to existing health conditions that you live with. These exclusions are specific to you and are noted in any Special Acceptance Terms agreed with you at the time of application.
As long as you are honest with us at the outset and fulfill your Duty of Disclosure – which means you tell us about your medical history and other details on your application – then we will commit to specific exclusions at the outset and no other exclusions are added down the track unless agreed as part of an increase in cover.

More cover for your peace of mind

NobleOak is unique amongst other direct insurers for the minimal number of exclusions on our policy.
If you take a look at other direct insurers’ lists of exclusions, many more things may rule out your chances of a claim being accepted.
If you are in the process of comparing TPD Insurance, it is important to read each insurer’s Product Disclosure Statement carefully. If there is anything you’re unsure of, speak to the insurer to clarify – the last thing you want is a nasty surprise (that is, the claim not being paid out) when you need it most.

Full underwriting gives you certainty

NobleOak TPD Insurance is fully underwritten at the time of taking out the cover. It means that terms of your cover are agreed with you from the outset, giving you more certainty around what exclusions apply to your cover – so you know exactly what you can claim for.

If you receive a NobleOak Total and Permanent Disability payment, it will be as a lump sum which you are free to use for anything that makes your life easier. For example, you may need to modify your home, buy specialised equipment, replace lost income or pay off your mortgage and clear credit card debt. There are no restrictions on how the money is spent, and everyone’s circumstances are different.

At NobleOak, if your payment exceeds $200,000, then an additional $5,000 is available to use for independent financial advice to assist you with managing your money.

You will need to have been absent from work for a continuous period of at least 6 months before NobleOak can assess a TPD Insurance claim. If at the end of those 6 months we are reasonably satisfied that you meet the definitions of your cover, we will process your claim as soon as possible.

For some conditions, like back problems or mental health issues, it can often take longer for medical practitioners to definitively state whether you are Totally and Permanently Disabled and unlikely to ever again engage in work in any, or your own, occupation (depending on which definition you are covered for).

There are, however, exceptional cases when the claim can be processed before the required 6 months have passed. For example, if you are involved in a serious motor vehicle accident and become quadriplegic, and you are irrefutably totally and permanently disabled, then NobleOak may waive the 6 months qualifying period.

If you have TPD outside super, any benefit payment is generally not considered taxable income.

If you are purchasing Life and TPD Insurance for business purposes, then your tax situation may differ. In this case, and for all queries about taxation, we recommend you seek advice from your accountant or financial adviser.

Is TPD Insurance tax deductible?

No, Total and Permanent Disability Insurance is not tax deductible. This is generally the case for most taxpayers when insuring themselves.

No, Total and Permanent Disability Insurance is not tax deductible.

This is generally the case for most taxpayers when insuring themselves. If you are purchasing Life and TPD Insurance for business purposes, then your tax situation may differ. In this case, we recommend you seek advice from your accountant.

There are pros and cons to both options, depending on your circumstances, the level of insurance you need, and whether you choose the ‘Any Occupation’ or ‘Own Occupation’ definition of TPD.

The level of TPD cover available in super funds is sometimes lower than the level of cover you can have outside super and may not be enough to adequately cover your needs. Also, since 2014, you are no longer able to have your TPD in super if you choose the ‘Own Occupation’ definition, as it would be a breach of SIS regulations to release benefits if you are under 65 and still working in another capacity.

If you choose the ‘Any Occupation’ definition and have your TPD Insurance inside your super fund, then your premiums are automatically paid out of your fund. This ‘out of sight, out of mind’ form of premium payment can be appealing; however, it is important to remember that these outgoings are diminishing your retirement funds and can possibly leave you short when you retire.

A disadvantage of having your TPD in super is that claims can take longer to be processed, because the Trustee of the super fund is also involved, and has to approve the release of the funds according to the Trust Deed and the relevant legislation.

Find out more about TPD Insurance and Insurance for SMSF’s when purchasing cover to financially protect the people you care about.