To receive a TPD payment, you must meet the definition in the insurance policy you select. Some policies require that you are unlikely or unable to work in any occupation for which you are ‘reasonably suited by training, education or experience’ while other policies may provide cover if you are permanently unable to work in your own occupation.
Generally policy definitions relate to your inability to work, but you may also obtain policies that cover other modified definitions. These might trigger payment if you lose limbs or your sight or are unable to undertake activities of daily living unassisted. This may provide cover for homemakers or others who are not working.
TPD cover under an ‘any’ occupation definition is less expensive than cover under an ‘own’ occupation policy but it could be more difficult to meet the requirements for a successful payment because the insurer may take into account other training and experience you may have when determining the extent of your inability to work.
The ‘any’ occupation definition may be suitable for you if you want to own the cover within your superannuation fund, you have only ever worked in the one occupation or you want the less expensive option.
The ‘own’ occupation option may be suitable for you if you have the cash flow to afford the higher premium and want the more flexible definition, or you have had a varied occupation history.
