How to compare TPD cover across insurers

TPD cover pays a lump sum if illness or injury permanently stops you working. It sounds simple. In practice it is the most definition-dependent product in the market, because “totally and permanently disabled” is not a medical fact — it is a contractual test, and insurers set that test in different places.

The most consequential difference is the occupation definition. Under own-occupation you are assessed against the job you actually did: a surgeon who loses fine motor control cannot be a surgeon, and the policy responds. Under any-occupation the same surgeon can teach or consult, so the claim fails.

Which of those you can buy depends on your occupation class, your insurer and your age at application, and it changes over the life of the policy because most wordings convert to the harsher test at a specified age.

Why the conversion age is the sleeper issue

Most people buy TPD in their thirties or forties, when own-occupation is available and affordable. The wording then converts, often somewhere around 60 to 65, to a much harder test — either any occupation, or an activities-of-daily-living definition that requires you to be unable to perform basic functions like dressing, bathing or feeding yourself.

That is precisely the age band in which permanent disability becomes more likely. The cover people rely on most in their sixties is frequently narrower than the one they bought in their thirties, and almost nobody is told that at the point of sale. Ask for the conversion age and the post-conversion definition in writing.

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

• Whether your occupation class qualifies for own-occupation with this insurer, and whether it would with another.
• The exact conversion age, and whether it differs between the TPD benefit and any TPD attached to trauma cover.
• Whether the definition requires you to be permanently unable to work, or unlikely ever to work again — the evidential bar differs.
• Whether a return to any paid work, even part-time and unrelated, defeats the claim.
• Whether the policy pays as a lump sum or in instalments, and whether any part is withheld pending review.
• Whether a TPD claim on accelerated cover permanently reduces the life sum insured your family relies on.

Every New Zealand insurer writes TPD cover 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.

• Own-occupation availability is occupation-class dependent and class definitions differ between insurers — an adviser knows which insurer classes your job most favourably.
• Conversion ages differ, and an adviser will show you what your cover becomes at 60 rather than only what it is today.
• Where own-occupation is unavailable, an adviser can compare intermediate definitions instead of accepting any-occupation by default.
• An adviser can price standalone against accelerated TPD and quantify what the buy-back is worth.
• TPD claims are heavily evidenced and often contested. An adviser knows what specialists need to write and when.

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.