Understanding Total and Permanent Disablement

Life doesn’t always turn out the way we plan. Illness and accidents are an unfortunate reality – and could potentially leave you unable to earn an income.

How would you, your family or your business cope if you could no longer earn an income? How would you manage if you needed permanent care?

The risks

  • 2.6 million Australians aged under 65 are living with a physical disability[1]
  • Australians suffer around 60,000 strokes per year or roughly one every 10 minutes[2]
  • About 88% of stroke survivors live at home and most have a disability[3]
  • Over one million Australians need assistance with core activities (such as communication, transport and self-care) due to sever disability[4]

The reality

Many Australians don’t take out insurance protection because of some common misconceptions such as:

“I’ll receive a disability pension”

The disability pension only provides around 20% of the average Australian wage[5]

“My TPD Cover in my default super fund is enough”

Insurance cover provided by your default fund could be as little as 20% of the cover required[6]

“I’m not the main income earner”

Child care and home help provided by a ‘stay-at-home’ spouse could be worth more than $75,000 per year[7]

What is Total and Permanent Disablement (TPD) Cover?

TPD Cover provides a tax-free lump sum payment if you become disabled to the point where you can no longer work. 

What does TPD Cover protect?

A lump sum payment is critical to meet the following expenses:

  • Mortgage repayments
  • Day-to-day expenses
  • Ongoing care
  • Medical bills
  • Home modifications

Jeremy’s Story

Working as an Electrician, Jeremy (35) is involved in a serious car accident on his way home.  The accident causes a major head trauma, leaving him permanently disabled. 

Jeremy now suffers from weak limb movements on his right hand side and can no longer continue work as a Electrician.  Living on the third floor in a small block of units, the only access to his unit is via the stairs.  This is not ideal as climbing stairs causes Jeremy great pain.  Once released from hospital, Jeremy makes the decision to look for a unit with ground floor access.  Because he owns his unit, there could be a delay before the sale proceeds can be used to put a deposit on a more suitable apartment.  

Fortunately for Jeremy, he’d thought ahead and taken out TPD cover when he began his Electrician career.

In this case of severe disabilities such as Major Head Trauma, TPD cover will give him the necessary cash when he needs it most.   Provided by CommInsure Claims.

How can a financial adviser help?

Through effective planning and provision for events that threaten your life, you can safeguard the financial future for you and your family today.  Putting your plan together is best accomplished with the help of a Risk Insurance Specialist. It may be the most significant step toward financial freedom you ever take.


[1] AIHW (2008) Australia’s health 2008, Cat. no. AUS 99, Canberra

[2] Stroke Foundation (2011) Facts, Figures and Statistics, www.strokefoundation.com.au/facts-figures-and-stats, viewed 12 March 2012

[3] Stroke Foundation (2011) Facts, Figures and Statistics, www.strokefoundation.com.au/facts-figures-and-stats, viewed 12 March 2012

[4] AIHW (2008) Australia’s health 2008, Cat. no. AUS 99, Canberra

[5] Disability pension at 20 September 2009 is $528.50 per fortnight for a disabled spouse with children – Centrelink.gov.au. $1,223.30 weekly ordinary times earnings, Australian Bureau of Statistics, November 2009.

[6] IFSA (2005) A Nation Exposed: Investigating the Issue of Underinsurance in Australia, Research study commissioned by IFSA and conducted by Rice Walker Actuaries and TNS Australia, Sydney

[7] IFSA (5 October 2005) Australian mothers – undervalued and underinsured, Media release, Sydney


The information contained on this website is for general information only and should not be relied upon unless you first discuss your circumstances with a Licenced Financial Planner.

The Authorised Representative of Alea Insurance Pty Ltd ACN 107 647 192 is Steve Wilson (AFSL No: 331367) who is licensed by ClearView Financial Advice Pty Ltd ACN 133 593 012.