Insurance: Income Protection for longer than 5 years vs TPD - DeepSeeks answer

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 What scenarios are there that I am out of work for 5 years due to injury and I can get income protection but I cannot claim on TPD?

There are scenarios where you might be unable to work for more than 5 years due to injury or illness and qualify for income protection insurance but not meet the criteria for a Total and Permanent Disability (TPD) claim. This is because income protection and TPD insurance have different definitions and requirements for payouts. Here are some examples:

1. You Are Not Permanently Disabled

  • Scenario: You suffer a severe injury (e.g., a back injury or complex fracture) that prevents you from working for more than 5 years, but there is a possibility of recovery or improvement in the future.

  • Why TPD Won’t Pay: TPD requires that you are unlikely ever to return to work in any occupation you are suited for by education, training, or experience. If there’s a chance you could recover and work again, even after 5 years, you won’t qualify for TPD.

  • Income Protection: Income protection will pay for the duration of your benefit period (e.g., 5 years) as long as you meet the definition of being unable to work due to injury or illness.

2. You Are Partially Disabled or Can Work in a Limited Capacity

  • Scenario: Your injury prevents you from working in your usual occupation (e.g., a surgeon with a hand injury), but you could potentially retrain or work in a less demanding role (e.g., medical administration).

  • Why TPD Won’t Pay: TPD typically requires that you are unable to work in any occupation you are reasonably suited for. If you can work in a different capacity, even if it’s not your preferred role, you may not qualify for TPD.

  • Income Protection: If your policy covers you for your own occupation, you may still qualify for income protection benefits while you’re unable to work in your specific role.

3. Your Condition Is Not Severe Enough for TPD

  • Scenario: You have a chronic condition (e.g., severe depression, chronic fatigue syndrome, or long COVID) that prevents you from working for 5+ years, but it doesn’t meet the threshold for being considered "permanent and total."

  • Why TPD Won’t Pay: TPD requires that your condition is both permanent and total. If there’s a possibility of improvement or if your condition doesn’t completely prevent you from working, you may not qualify.

  • Income Protection: Income protection will pay as long as you meet the definition of being temporarily unable to work due to illness or injury.

4. You Are Still Undergoing Treatment or Rehabilitation

  • Scenario: You are out of work for 5+ years due to a severe injury (e.g., a spinal injury) and are undergoing ongoing treatment or rehabilitation with the hope of recovery.

  • Why TPD Won’t Pay: TPD claims often require that your condition has stabilized and is unlikely to improve. If you’re still in treatment or rehabilitation, it may be too early to determine if your disability is permanent.

  • Income Protection: Income protection will pay during the benefit period while you’re unable to work, regardless of whether your condition is permanent.

5. You Can Perform Some Activities of Daily Living

  • Scenario: Your injury prevents you from working but doesn’t severely impact your ability to perform activities of daily living (e.g., walking, dressing, or feeding yourself).

  • Why TPD Won’t Pay: Some TPD policies include an "activities of daily living" test. If you can still perform these activities, you may not qualify for TPD, even if you can’t work.

  • Income Protection: Income protection focuses on your ability to work, not your ability to perform daily activities, so you may still qualify.

6. Your TPD Policy Has a Stricter Definition

  • Scenario: Your TPD policy uses an "any occupation" definition, meaning you must be unable to work in any job suited to your education, training, or experience.

  • Why TPD Won’t Pay: Even if you can’t work in your usual occupation, you may be deemed capable of working in a different role, disqualifying you from TPD.

  • Income Protection: If your income protection policy uses an "own occupation" definition, you may still qualify for benefits while you’re unable to work in your specific role.

7. You Are Waiting for a TPD Assessment

  • Scenario: You’ve been out of work for 5+ years due to injury, but your TPD claim is still being assessed or disputed by the insurer.

  • Why TPD Won’t Pay: TPD claims can take a long time to process, especially if the insurer requires additional medical evidence or disputes the claim.

  • Income Protection: Income protection will pay during the benefit period while your TPD claim is being assessed.

Key Takeaways:

  • Income Protection covers temporary inability to work due to injury or illness, regardless of whether the condition is permanent.

  • TPD requires that your condition is permanent and total, meaning you are unlikely ever to work again in any occupation you are suited for.

  • Scenarios where you might not qualify for TPD but can claim income protection include:

    • Your condition is not permanent.

    • You can work in a different capacity.

    • Your condition is still being treated or rehabilitated.

    • Your TPD policy has a stricter definition (e.g., "any occupation").

If you’re concerned about gaps in coverage, consider combining income protection with a longer benefit period (e.g., until age 65) and TPD insurance to ensure comprehensive protection. Always review the specific definitions and terms of your policies. Consulting a financial advisor or insurance specialist can also help you tailor your coverage to your needs.

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