Total Permanent Disability Explained

Claim success for critical illness, terminal illness, income protection and life policies, all boast an average pay out above 90%. Yet according to the Association of British Insurers (ABI), claims for Total Permanent Disability (TPD) in 2015 only averaged 66%.

Before the ABI introduced the standard definition for TPD in 2011, the claim success was even lower at 50% in 2009. So why, despite the hard work advisers and providers are doing to create clarity and transparency on all types of policy, does TPD fall behind on claim success?

Although most definitions have been universally agreed, which has reduced the number of declined claims, there is still difficulty in proving whether a disability, as the name suggests, is “totally permanent”. This has unfortunately led to claims being made that did not quality for payment. This has cast TPD in a slightly negative light, despite how useful it can be for those looking for the most comprehensive cover.

What exactly is TPD?

TPD is normally an optional benefit which can be added to critical illness cover, if it is not already automatically included as part of the policy. TPD provides a lump sum if you suffer an illness or injury that leaves you totally and permanently disabled.

Because the definitions of what is a total and permanent disability vary between providers, it is important to understand what situations are covered and which are not. Understanding your policy is an important part of getting cover and we are here to help.

When would I be covered?

TPD can cover you where critical illness can’t. Normally, providers require one of a certain number of definitions to be met in order for a TPD claim to be successful. This can either be based on the policyholder’s ability to continue their “own” or “any” occupation, or on the inability to perform certain basic tasks, such as bathing, dressing, eating and moving around.

TPD can also cover you for loss of limbs or sight, as well as if you suffer cognitive impairment. But again, this can vary between insurers so it is vital to check your cover options

What is the difference between “own” and “any” occupation?

Own occupation means your cover is only for your current role. This can often mean a more expensive premium, compared to “any” occupation. An example of this would be a surgeon with “own” occupation cover being able to claim if they lost the use of their hands. However, “any” occupation cover would likely mean they would still have options in the medical industry that do not necessitate the use of hands, such as becoming a general practitioner.

There are some situations where an illness or injury prevents you from working, but is not necessarily permanent. An example of this might be a temporarily debilitating migraine which prevents you from working, but is very unlikely to be deemed a total permanent disability.

Income Protection as part of your comprehensive cover will greatly improve your chances of always being covered, even if your inability to work is temporarily. The most comprehensive cover can deliver peace of mind and protect you under the most circumstances. Talk to us today and we can discuss the options for protection.

Contact our advisers today on 01202 937444 or visit our other websites to speak to a mortgage broker in Reading or a mortgage broker in Bournemouth