Cover if you can never return to work

TPD insurance NZ, common questions.

Quick answers to the questions New Zealanders ask us most often. Something not covered? Just call or drop us a note.

• What is TPD insurance in New Zealand?

  Total and permanent disability (TPD) insurance pays a lump sum if illness or injury leaves you permanently unable to work. It's designed for the situation where your earning capacity is gone for good – clearing the mortgage, funding home modifications and providing long-term financial certainty.

• What does 'total and permanent' actually mean?

  It means the insurer accepts you're unlikely ever to work again under the definition in your policy. That's usually assessed after a continuous period of disability – commonly three to six months – and supported by specialist medical evidence. Being off work for a long time isn't enough on its own; the disability must be permanent.

• What's the difference between own occupation and any occupation TPD?

  Own occupation pays if you can never work again in your specific job – a surgeon who loses fine motor control, for example. Any occupation only pays if you're unlikely to work again in any role you're suited to by education, training or experience. Own occupation is stronger and more expensive, and isn't available for every occupation.

• How much does TPD insurance cost in NZ?

  It depends on your age, occupation, health history, how much cover you hold, whether the definition is any-occupation or own-occupation and whether the cover is standalone or accelerated against a life policy. Accelerated cover is generally cheaper than standalone. Because those factors vary so much between people, we don't publish indicative prices – an adviser will walk you through the options and what they'd cost for you.

• How much TPD cover should I have?

  Most New Zealanders start with enough to clear the mortgage and other debt, then add an allowance for home and vehicle modifications, ongoing care, and the retirement savings you'd no longer be making. It's common for TPD cover to be sized at or near the level of your life cover.

• Do I need TPD if I already have ACC?

  Yes, in most cases. ACC covers permanent disability caused by accidents only. Stroke, multiple sclerosis, motor neurone disease, degenerative conditions and other illnesses that permanently end a working life are not covered by ACC at all.

• How is TPD different from income protection?

  Income protection pays a monthly benefit while you're unable to work, including temporary disability, and stops when you recover or the benefit period ends. TPD pays a single lump sum only when the disability is permanent. Many households hold both: income protection for cash flow, TPD for the capital costs.

• How is TPD different from trauma cover?

  Trauma pays on diagnosis of a listed condition regardless of whether you can work – you might claim and fully recover. TPD pays only where the disability is permanent, and isn't limited to a list of named conditions. They cover different ends of the same risk.

• Is a TPD payout taxed in New Zealand?

  Personal TPD benefits are generally paid as a tax-free lump sum, and premiums on a personal policy are generally not deductible. Business-owned TPD cover can be treated differently, so it's worth confirming the position with your accountant.

• Can I claim TPD if I can still do some work?

  Usually not under a standard TPD definition, which requires permanent inability to work. If you can return part-time or in a modified role, income protection with a partial or proportionate benefit is generally the cover that responds.

• How long does a TPD claim take?

  TPD claims take longer than most because permanence has to be established. After the initial waiting period, insurers gather specialist reports and occupational assessments, and the process commonly runs several months. Having an adviser coordinating the evidence makes a real difference.

• Does TPD cover mental illness?

  It can, but terms vary. Permanent psychiatric disability may be covered under an any-occupation or ADL definition, while some insurers apply exclusions or restrictions where there's a prior mental health history. This is a wording comparison worth doing properly.