TPD

INSURANCE AND SUPERANNUATION –
RECOMMENDED CHANGES MAY IMPACT YOU

Total and Permanent Disability (TPD) Insurance pays a lump sum if you are totally and permanently disabled before you retire and unable to return to work. It is a safeguard that reduces the financial burden by providing funds to ensure your quality of life is maintained.

There are generally two types of TPD cover available – ‘any’ occupation and ‘own’ occupation. With ‘any’ occupation cover, the insurer agrees to pay if by reason of accident or injury, you are unable to work ever again, in any occupation for which you are reasonably suited by education, training or experience.

To satsify the ‘Own’ occupation definition, one must by reason of accident or injury, be unable to work ever again in their own or normal occupation.  Generally, ‘own’ occupation cover is more expensive as it is unique to your ‘own’, rather than ‘any’ occupation, in the assessment conditions for the policy.

Historically, TPD Insurance premiums have been tax deductible to the fund, when paid from a superannuation fund.  However, recent recommendations (via the Cooper Review) to streamline superannuation laws and insurance conditions will impact the tax deductibility of ‘own’ occupation TPD insurance held within superannuation.

From 1 July 2011 only the ‘any’ occupation TPD insurance premium will continue to qualify for tax deductibility within superannuation.

It is important to note, in this regard, that whilst superannuation contributions to a fund may still be deductible to members, in accordance with current superannuation legislation, it is the premium payment made by the super fund to the insurance cover provider that will not be tax deductible to the fund in the case of an ‘own’ occupation TPD definition.

If you are unsure about your type of TPD cover, it may be an opportune time to speak with us about our TPD insurance arrangements.