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I’m going to get Critical Illness Cover but one thing that I would like more information on Total & Permanent Disability protection to help with my research. Can you explain what this is and should I make sure I have it in my policy?
Total & Permanent Disability is a policy term you’ll see on policies, but what does it mean? We asked Drewberry’s Independent Protection Specialist, Alex Weir, to give us the lowdown. Just press play! 👇
Total and Permanent Disability (TPD) is a condition that refers to an individual being unable to work due to a serve disability or illness.
It is one of about 35 specific medical conditions covered on a critical illness plan. If your policy covered TPD it would payout if you became ‘totally and permanently’ unable to work due to sickness or injury.
Claims for TDP represent around 3% of all claims on Critical Illness policies. However, of that 3%, 55% are rejected for not meeting the TPD definition (source: ABI).
In most cases, payout rates for Critical Illness plans are usually over 90% with most insurers. Having such a low total permanent disability payout rate suggests a general lack of understanding when it comes to what it actually covers.
One very important factor to consider when it comes to Total Permanent Disability is that there are multiple definitions of it. We will take you through these below.
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Naturally, an ‘own occupation’ definition is the most comprehensive form of cover as it means that you would be covered in your exact job.
If a surgeon permanently lost the use of one of their hands, and were unable to perform operations and didn’t have TPD, they would be unable to make a claim. This is because none of the other ‘Critical Illness Definitions’ would cover this medical condition.
It’s important to understand the different definitions, as this can be the difference between a claim paying out and not.
For example, if a dancer was unable to dance again due to injuring their back, an ‘Own Occupation’ definition would pay out. However, if they had an ‘Any Occupation’ definition, they wouldn’t be covered if they were well enough to do another job.
This is just an example, because it’s very unlikely that a dancer would be offered Own Occupation cover in the first place, given their high risk job.
It is important to note that total and permanent disablement is only one of around 35 conditions covered under a critical illness plan. Other conditions do not relate to whether you are unable to continue working or not. Claims will result from the diagnosis of a specific condition.
The vast majority of claims on critical illness policies are for:
Some confusion often relates to becoming paralysed and whether a claim can be made on a Critical Illness plan and how this relates to TPD. For instance, if you were to become paralysed, the likelihood is that you’d be unable to continue working on a permanent basis. In this case, a TPD claim would usually be valid.
However, as all leading Critical Illness policies cover paralysis as a separate condition, a claim wouldn’t need to be made under total permanent disability.
There’s a lot to consider when it comes to Critical Illness Insurance. If you need any help to ensure you understand your options and get the best possible cover, don’t hesitate to get in touch.
Our friendly team of specialist, independent financial advisers are on hand. Just pop us a call on 02084327333 or email help@drewberry.co.uk.
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