What is Total Permanent Disability on Critical Illness Cover?

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?

Question asked by Paul James

Watch Our Expert Video On Total & Permanent Disability

Total & Permanent Disability is a policy term you’ll see on policies, but what does it mean? We asked Drewberry’s Independent Protection Expert, Alex Weir, to give us the lowdown. Just press play! 👇

What Is Meant By Total & Permanent Disability (TPD)?

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.

The Importance of Understanding Total Permanent Disability?

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.

Definition of Total Permanent Disability

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.

  • Own Occupation Total Permanent Disability
    TPD can be offered on an ‘own occupation’ basis for low risk workers. This means a plan could payout if you’re totally and permanently unable to work in your own job due to sickness or injury.
  • Suited Occupation Total Permanent Disability
    With this definition, a policy would pay out if you were unable to work in any occupation that you’d be suited to based on your skills and experience.
  • Any Occupation Total Permanent Disability
    This means that the plan could payout if you were totally and permanently unable to work due to sickness or injury in any occupation whatsoever
  • Functional Assessment Tests / Work Tasks Definition
    This is also sometimes known as ‘Work Tasks’ definition. If you were permanently unable to carry out a number of ‘Functional Assessment Tests’ without the help of another person, a policy would pay out.

Naturally, an ‘own occupation’ definition is the most comprehensive form of cover as it means that you would be covered in your exact job.

Examples of Total Permanent Disability Claims

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.

Owned Vs Any Occupation

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.

Total Permanent Disability Is Just One Condition

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:

  • cancer
  • heart attack
  • stroke.

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.

Need Expert Help?

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 expert, independent financial advisers are on hand. Just pop us a call on 02084327333 or email help@drewberry.co.uk.

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