When you start a TPD cover policy, you may be given a choice of definition that will apply at claim time.
The two main choices are:
· Own occupation – Where your claim is assessed against your ability to perform the specific requirements of the job you currently do, or
· Any occupation – Where your claim is assessed against your ability to perform any job you are qualified or suited to based on your education training or experience
Say you’re a cabinetmaker who permanently loses the use of one of their hands. Under an own occupation definition, you’re likely to be considered totally and permanently disabled as you’ll never be able to perform your current job again. But under an any occupation definition, you may still be able to work for a building supply company providing advice or as a TAFE teacher which means you may not be considered totally and permanently disabled.
With a greater likelihood of a claim being accepted, an own occupation definition typically adds to the cost of TPD cover, and it may not be available to all occupations.
Generally, a TPD claim will only be paid when you obtain “maximum medical improvement”. That means you need to have had any operations, rehabilitation or medical procedures recommended by your treating doctors.
As you can imagine, a TPD cover claim can take months or even years to play out, and it does have a higher decline rate than other cover types because of the difficulty in proving permanency. For those reasons, TPD cover is often taken in conjunction with trauma cover – which can provide more immediate financial support.