Total Permanent Disability Definition May Be Changed

The commonly used “total permanent disability” definition used in critical illness policies (which are often added to life insurance plans) may be replaced by a new definition called “irreversible life-changing disability”, under new recommendations made by the Association of British Insurers (ABI). These new recommendations now need to meet with industry approval.

Proposed changes to the definition have been muted around for some time now and the new definition is supposedly supported by consumer research. The new plans are reported to be undergoing a period of consultation this month.


It is argued that the need for an overhaul is evident from the statistics showing that around 55 percent of total permanent disability claims are declined under the current definition. Disputes about this definition also account for approximately 35 percent of all complaints about critical illness cover made to the Financial Ombudsman Service (FOS).

This is not the first time that changes to this aspect of critical illness insurance have been proposed. Last year a proposal to replace the definition with a carefully worded set of definitions was rejected by the industry.

Consumer focus groups now back using the definition “irreversible life-changing disability” as the clearest definition for consumers to understand the nature of the cover provided. It is argued that this definition gives a better idea of the severity of the medical condition needed to make a valid claim using such a definition.

Another advantage of this change would be to assist those consumers who do not read the entirety of the critical illness definitions as the heading should be enough to inform the consumer about the type of cover provided. The proposed new definition is also likely to have specific definitions based on the occupation definition of the policy, such as a ‘own’ or ‘suited’ occupation irreversible life-changing disability.

A new statement of best practice could be released by the Association of British Insurers as soon as the end of August if these proposed changes are approved during this months consultation period. If accepted insurers would have up to one year in which to implement the changes.

Mortgage critical illness and life insurance are often combined in order to provide protection against the risk of home repossession due to serious illness in addition to death. Drewberry Mortgage Insurance welcome any proposed changes that increase the clarity of the cover provided.