An illness or accident can leave you unable to work.

Consider how you and your family would manage without your income.

Total and permanent disability (TPD) insurance pays you a lump sum benefit. This can be used for a variety of purposes. For example:

• to pay off your debts, like mortgages, car loans, and credit cards, allowing you to rebuild your life without the additional stress of coping with debts
• replace your income so your family's lifestyle can continue with as little disruption as possible
• provide funds for your children's education
• meet additional expenses (like nursing care or house keeping) that may arise.

This list provides a way of estimating how much cover you need. If things in your life change (like a new baby, extension to the mortgage, or additional loan), it's important to review the level of cover you hold.

Insurers must have a definition of TPD so they can assess claims. Usually it's when you have been unable to work for a period of time and are unlikely to be able to work again in any position for which you are suited, based on your education, training, or experience. You'll need to provide medical evidence to support a claim.

TPD insurance is usually provided with life insurance. The premiums for TPD insurance will vary with your age, sex, and medical history. Other factors insurers consider include your occupation and lifestyle. Usually you won't be able to claim a tax deduction for TPD premiums.

However you may have TPD insurance through your super fund and this is usually cheap and easy to arrange.

• Some insurers have different definitions of TPD.
• If you think you have too much TPD cover, think before you cancel it. Will you be able to get it back if you need it in the future at the same premium?

If you are paid a lump sum benefit because you are totally and permanently disabled, your payout will be concessionally taxed. However, it may not all be tax-free, and higher rates of tax apply if you withdraw the benefit before age 55.

If you are receiving a lump sum payment due to a disability, we recommend you seek financial advice.