How much TPD cover do you need

Total and permanent disablement cover pays a lump sum if illness or injury leaves you permanently unable to work. It is the least understood cover in the New Zealand suite, partly because the name is self-explanatory and the wording is not.

For sizing, start where you would start with life cover: clear the debt, replace the income, fund the children. Then add the part that makes TPD different. If you die, the household loses your income and your costs. If you are permanently disabled, the household loses your income and keeps your costs — and usually adds new ones. Home modifications, a modified vehicle, ongoing care, and possibly a partner who reduces their own work to provide it.

That is why a well-sized TPD sum insured is often larger than people expect, and why a policy sized to the mortgage alone tends to run out within a few years of a claim.

A generous sum insured under a definition you will never satisfy is worth nothing. Get this settled before you argue about the amount.

Own occupation is materially easier to claim under and materially more expensive, and it is not available for every occupation. Any occupation is the version most people are sold, and it is a high bar — a surgeon who loses fine motor control may still be able to teach, which under an any occupation definition can be enough to decline the claim.

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

• Which definition applies, and whether it changes with age. Many policies switch from own occupation to any occupation at 60 or 65.
• The waiting period before the insurer will assess permanence — commonly three or six months of continuous disability.
• Whether the policy is accelerated against life cover or standalone.
• The maximum sum insured available, which is usually lower than the maximum life cover the same insurer will write.
• Whether the cover ends at 65 or 70, and what happens if you are still working past that age.
• For non-earners, whether a home duties definition is offered and what it caps at.

Every New Zealand insurer writes how much life insurance do you need 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.

• Occupation determines whether own occupation cover is even available to you, and insurers class occupations differently.
• Some insurers will write own occupation for a profession another insurer will only cover under any occupation.
• Structuring part of the cover as TPD and part as trauma often produces better protection than putting everything into one benefit.
• TPD claims are assessed on medical and vocational evidence, and an adviser who has run claims knows what that assessment actually looks like.

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.