What Is a TPD Claim and How Does It Work?

Imagine life taking an unexpected turn—a car accident, a diagnosis, or a workplace injury—and suddenly you’re unable to work again. For many Australians, these ‘what ifs’ can feel uncomfortably close to home.

That’s where TPD insurance—Total and Permanent Disability cover—comes in. It provides a financial safety net, offering a lump sum payment if you’re permanently unable to work due to illness or injury. A successful TPD claim can mean the difference between financial hardship and long-term stability for those who suffer an illness or injury that causes them to retire early.

But what exactly is a TPD claim, how does it work, and what should you do if you need to lodge one?

Understanding “Own Occupation” vs “Any Occupation” TPD Definitions

When it comes to making a TPD claim, one of the most important details is how “disability” is defined under your policy. There are two main types: Own Occupation and Any Occupation. The difference between them can dramatically affect your eligibility—and your payout.

Own Occupation TPD

This definition means you’re considered totally and permanently disabled if you can’t work in the specific job you were trained for or had experience in at the time of your disability.

Example:
Let’s say Sandra is a 55-year-old dentist. After developing severe arthritis in her hands, she’s no longer able to perform dental procedures. With an Own Occupation policy, she could make a successful TPD claim—even if she’s capable of working in another field, like teaching or administration.

• More flexible definition
• Higher likelihood of claim approval
• Often comes with higher premiums

Any Occupation TPD

This more stringent definition only pays out if you’re unable to work in any job for which you are reasonably suited by education, training, or experience—not just your current or past role.

Example:
If Sandra had an Any Occupation policy, she would only qualify for a payout if her condition prevented her from doing any job she could reasonably perform.

• Harder to meet eligibility

• Generally lower premiums

• May result in declined claims for older professionals who could still work in a less physical capacity

What Is a TPD Claim?

A Total and Permanent Disability (TPD) claim is made when a person is no longer able to work in their usual occupation—or sometimes in any occupation—due to a serious illness or injury. It provides a vital safety net, offering a lump sum payout from your insurer or super fund to help cover living costs, pay off debts, and maintain your financial independence when life takes an unexpected turn.

This payout can be used to:

• Cover medical and rehabilitation expenses
• Replace lost income
• Modify your home or vehicle for accessibility
• Pay off your mortgage or other debts
• Fund long-term care or therapy
• Support your family if they depend on you financially

Common health events that can trigger a TPD claim include:

• Stroke or heart disease – life-altering events that can severely limit mobility and independence
• Cancer – especially in advanced stages where ongoing treatment and recovery affect your ability to work
• Chronic back or spinal injuries – which may limit mobility and cause ongoing pain
• Severe mental health conditions – such as depression, anxiety, or PTSD that render someone unable to maintain employment
• Loss of limb or eyesight – due to accidents or illness
• Permanent disability from accidents – for example, a serious car crash resulting in paralysis or brain injury

Think of TPD insurance like a parachute—you hope you never need to use it, but if life pushes you out of the plane unexpectedly, it could be the difference between a controlled landing and a financial freefall.

How Does a TPD Claim Work?

The process of making a TPD claim can feel overwhelming, especially during an already stressful time. Here’s a step-by-step guide:

1. Check Eligibility
Start by reviewing your TPD policy or superannuation fund. Definitions vary. Some cover you if you’re unable to return to any occupation, while others focus on your own occupation.

Tip: “Own occupation” policies typically have broader eligibility and higher premiums.

2. Gather Medical Evidence
This includes medical reports from your GP, specialists, scans, and possibly independent assessments requested by the insurer.

3. Submit the Claim
Submit all required forms, medical documents, and identification through your insurer or super fund. Many also require a treating doctor’s report and employer statement.

4. Wait for Assessment
TPD claims can take time—typically 3 to 12 months—depending on the complexity and quality of evidence provided.

5. Receive the Payout

If successful, the insurer or fund pays out a tax-free lump sum (if paid via super and you’re over 60). This can be used for:

• Paying off a mortgage
• Covering medical or care costs
• Replacing lost income
• Funding early retirement

TPD Insurance Through Super vs. Standalone Policies

In Australia, most people have TPD insurance inside their superannuation fund. It’s a convenient and affordable option—but it’s not perfect.

Feature	TPD in Super	Standalone TPD
Cost	Usually cheaper	More expensive
Claim definitions	Often more restrictive	More tailored
Payout access	Must meet a super condition of release	Paid directly
Tax treatment	Tax-free over age 60	Depends on circumstances

Example: John, 56, had TPD through his super but didn’t realise his policy only covered “any occupation.” After a workplace injury, he couldn’t return to his trade but could work in a different role—his claim was denied. A financial adviser could’ve helped him identify this gap earlier.

Common Challenges in TPD Claims

Unfortunately, not all claims are smooth sailing. Common issues include:

• Ambiguous definitions – Different interpretations of what “permanently unable to work” means
• Insufficient medical evidence – Missing reports or inconsistent documentation
• Disputed claims – Where the insurer believes work is still possible

If your claim is denied, you can:

• Request a formal review or appeal
• Lodge a complaint with the Australian Financial Complaints Authority (AFCA)
• Engage a financial adviser or claims specialist for support

What to Do After a Successful TPD Claim

Receiving a lump sum can feel like a financial lifeline—but it also comes with big decisions.

1. Create a Financial Plan
Work with a financial adviser to create a plan for income replacement, budgeting, and long-term security.

2. Consider Investments
Depending on your retirement goals, investing part of your TPD payout wisely can help generate income or fund aged care needs in the future.

3. Understand Tax and Centrelink Impacts
While TPD benefits paid through super are often tax-free after age 60, it’s important to assess how the lump sum may affect any existing or future Centrelink entitlements.

Final Thoughts

Navigating the world of insurance—especially when it comes to something as significant as a TPD claim—can be complex and emotionally taxing. For ageing Australians, understanding your options and securing the right protection is essential not just for your peace of mind, but for the wellbeing of your loved ones and your financial future.

Whether you’re reviewing an existing policy, considering cover for the first time, or facing the reality of making a claim, you don’t have to do it alone. Having the right support and guidance can make all the difference—both in getting a claim approved and in structuring a plan that truly protects you when life takes an unexpected turn.

At Coastal Advice Group, our dedicated Risk Specialist Team is here to help. We take the time to understand your unique situation and goals, and we’ll work with you to develop a tailored insurance plan that’s both comprehensive and competitively priced.

Book your free, no-obligation Discovery Call with our Risk Specialists today and take the first step toward securing your financial future with confidence.

Or call our office to arrange your Discovery Call

Let us help you make sure you’re protected—because your future deserves more than guesswork.

References:

• Australian Prudential Regulation Authority (APRA). Life Insurance Claims and Disputes Statistics, 2023.
• Australian Securities and Investments Commission (ASIC). Moneysmart: TPD Insurance Guide, 2024.
• Australian Taxation Office (ATO). Tax on super death benefits and disability payments, 2024.
• Australian Financial Complaints Authority (AFCA). Dispute Resolution Process, 2023.
• Finder.com.au. TPD Insurance Explained, 2024.