How a TPD claim is assessed

Total and permanent disability cover pays a lump sum when illness or injury leaves you permanently unable to work. It exists to do what income protection cannot: fund a permanent change of life — clearing the mortgage, adapting a house, funding care — rather than replacing a monthly income.

The assessment turns almost entirely on the definition in your policy. Own-occupation TPD asks whether you can ever again work in your own occupation. Any-occupation TPD asks whether you can ever again work in any occupation you are reasonably suited to by education, training or experience — a far harder test to satisfy. Home duties and loss-of-independence definitions apply different tests again, based on specified activities of daily living or domestic tasks.

The second decisive word is permanent. An insurer cannot conclude that something is permanent while treatment is ongoing and the outcome is unknown. That is why TPD policies impose a qualifying period of continuous disability, and why TPD claims often cannot be resolved as quickly as families would like.

1. 1

   Notify and open the file

   Notify as soon as it becomes clear that a return to work is unlikely. The qualifying period usually runs from when you stopped work, so early notification does not disadvantage you.

2. 2

   The qualifying period

   A continuous period of total disability — commonly measured in months — must elapse before the insurer will assess permanence. This is in the wording and it is not negotiable.

3. 3

   Claim forms and authority

   Your statement, medical certificates from treating doctors, an employer statement where relevant, and an authority for the insurer to obtain full medical records.

4. 4

   Specialist and functional evidence

   Reports from treating specialists on prognosis, and often a functional capacity assessment measuring what you can physically or cognitively do. On any-occupation definitions a vocational assessment may consider what other work you could realistically do.

5. 5

   Assessment against the definition

   The assessor applies the contractual test. On own-occupation cover the question is narrow. On any-occupation cover it is broad and much harder to satisfy.

6. 6

   Decision and payment

   A lump sum on acceptance. Where the TPD is accelerated against life cover, the payment reduces the life sum insured unless a buy-back applies.

These are the details that decide whether the cover does what you expected. Read them before you compare on price.

• Which definition your policy uses — this is the single most important fact about your TPD cover.
• Whether your occupation class allowed own-occupation cover, and whether the definition changes at a certain age.
• The qualifying period of continuous disability before the claim can be assessed.
• Whether the TPD is standalone or accelerated against life cover.
• Whether a buy-back reinstates life cover after a TPD payment.
• Whether an income protection claim is running in parallel and how the two interact.

Every New Zealand insurer writes how life insurance claims work to its own wording, and the words are where the money is. Two policies that look identical on price can pay very differently when it matters. Closing that gap is the entire job of an adviser.

• An adviser will tell you at purchase whether own-occupation cover is available to you, which is the decision that most affects a future claim.
• They can identify from the wording exactly what evidence the definition requires, so the reports obtained answer the right question.
• They can run a TPD and income protection claim together where both policies respond.
• They will tell you honestly if a claim does not meet the definition, rather than letting you spend a year finding out.
• If the claim is declined, they can assess whether further functional or vocational evidence would change the position.

There are three ways to buy life cover in New Zealand, and they are not equivalent. You can buy direct from one insurer, which means you see one product range and one underwriting appetite. You can buy through your bank, which usually means a single insurer’s product sold under the bank’s brand, often with narrower definitions. Or you can go through an adviser, who quotes several insurers at once and is required to put your interests first.

The premium you pay is the same either way. Insurers build adviser commission into their pricing whether or not an adviser is involved, so going direct does not get you a discount — it just removes the person whose job is to argue your corner at application and at claim time.

• An adviser can see which insurer is currently taking your health history on standard terms, and which one will load or exclude it.
• An adviser can structure cover across two insurers if that produces a better outcome than putting everything with one.
• An adviser handles the underwriting back-and-forth, and is the person who chases the claim when a family is least able to.
• An adviser has to document why the recommendation suits you, which is a written record you can hold them to.

We are a referral service, not an insurer. We do not quote premiums and we do not sell policies. What we do is put you in front of one licensed New Zealand adviser who can compare the market properly.

1. 1

   You tell us what you are looking at

   The form takes about a minute. Nobody asks for your medical history on a web form — that conversation happens with the adviser, properly, and only once you have decided to proceed.

2. 2

   An adviser calls you

   A licensed New Zealand adviser talks through your situation: who depends on you, what you owe, what you already have in place, and what you are actually worried about.

3. 3

   They compare the market

   The adviser quotes across the major insurers, checks which of them will take your health history on the best terms, and puts the options side by side in writing.

4. 4

   You decide, in your own time

   There is no obligation and no cost to you. If the answer is that you already have enough cover, a good adviser will tell you that.