Total and Permanent Disability is a lump sum insurance that pays a benefit to the insured person should they become totally and permanently disabled. The insurance can have two types of definitions:
* Any occupation TPD – This cover pays a benefit when a person insured can no longer work in any occupation
* Own occupation TPD – This cover pays an interest when the person insured can no longer work in their particular occupation
Total and Permanent Disability (TPD) provides for a tax-free lump sum in case of severe illness or injury that disable a person to return to- the workforce. It is critical to note that each insurer’s definition of what TPD cover is may be different. This applies both to ‘Any occupation’ and ‘Own occupation’ definitions. Therefore, it is imperative that you consult with your broker or financial adviser to get a good understanding of the cover you need and then compare between different providers as to which insurer will provide you with the protection that you are after.
A simple example would be for instance a Chef, and in our case let’s assume that our Chef lost the use of an arm due to an accident. With an own occupation policy our chef would be covered under this event as the total loss of an arm would not allow him to return to his prior occupation,. Whereas if he had held a simple any occupation policy this would prove harder to claim as there are still plenty of jobs that can be completed even with the loss of 1 limb.