Total and Permanent Disability

Total and Permanent Disability insurance provides a lump sum payment if you (or a key person in your business) suffer a total and permanent disability and are unable to work again.

It is often taken as an extension to income protection insurance, but pays a lump sum when you have an illness or injury and will never be able to return to work.

The advantage of combining income protection with total and permanent disability insurance is that you can cover your debts such as your mortgage and other loans plus paying your living expenses to retirement. Your income protection can be put towards everyday living expenses or even adding regular amounts to your superannuation.


Neil was a 50 year old mechanic undertaking car repairs at a mechanical workshop. He was single, had no dependants and a mortgage of around $200,000.

While renovating his home, he slipped with a jigsaw and cut off three of his fingers which were unable to be reattached.

As a ‘hands on’ mechanic, he was unable to work in the same profession ever again or find other work that suited his experience, education or training.

Unfortunately, Neil only had life insurance which offered no payout for total and permanent disability. He had taken out life insurance to provide benefits to his siblings and nieces and nephews on his death, not considering how he would support himself if he was disabled. His only source of income was a disability pension paid through Centrelink.

Luckily for Neil, his father was able to access his own personal superannuation to pay the remainder of the mortgage so his son could be debt-free – however that put strain on his parents during their retirement.