The Total and Permanent Disability Cover clause is a mainstay of many Life Insurance plans. Often it is embedded within the plan, without the option to decouple (or remove) it – such is its fundamental nature.
We can find it in pretty much every major class of policy there is out there –
Whole Life Plans
Investment Linked Policies
Much like death cover, TPD is pretty much ubiquitous. But unlike the claim condition for death (which is a permanent lack of pulse), TPD claim conditions are slightly more subjective. (Some say onerous)
Wouldn’t it be instructive to know exactly what does it cover?
Before the What, comes the Why
Wait up! Why do we even want to know about TPD in the first place?
You might think: Whether I know anything about it or not, I cannot change the clause. Or influence the claim. So why bother?
The answer, my curious friend, lies in expectation.
We often buy things without fully understanding them – investments and policies are prime examples (ironically, we spend more time researching a new phone) – and then get disappointed later when things don’t live up to expectation.
This article from the Straits Times explains it clearly: How to survive an Insurance Claim
Key excerpt from the article:
To foolproof your coverage, it’s not enough to glance over your policy and feel like you understand it. You have to pay attention to ambiguities in language and check, perhaps with the help of an agent, if your interpretations are actually correct. At least, that’s what I’ve learnt from experience.
Knowing about TPD (and other claims that you can make), better shapes your expectations when it comes right down to it. IF it comes right down to it.
Worth the few minutes to educate yourself, wouldn’t you say?
TPD Definition 1: The Clint Eastwood
That is is our fancy term for the most classic (and widely used) definition of TPD. A hard man, no nonsense, armed with a snarl that makes pitbulls cower in fear. How fitting.
Its actual, boring, legalese name is Presumptive TPD. Not that catchy.
Presumptive TPD is thus named because if these prescribed sets of conditions happen to you, then you are presumed to be Totally and Permanently Disabled. Cheerful. (not)
Here are the conditions:
a. Loss of the sight of both eyes;
b. Loss of sight of one (1) eye and loss by severance or loss of use of one (1) limb at above the ankle or wrist;
c. Loss of severance or loss of use of:
i. Both hands at or above the wrists;
ii. Both feet at or above the ankles;
iii. One (1) hand at or above the wrist and one (1) foot at or above the ankle
This is the most famous definition of TPD there is, and you’ve probably heard about it in some way, shape, or form. The Clearly Surely way to summarize this:
Your Eyes, Hands and Feet are crucial. Lose any combination of two of them, and it is considered a TPD. Hands and feet must be severed above the wrist and ankle, respectively.
For clarity, if you lose more than 2 of them, you don’t get any extra payout. Not sure why that came to mind, it just did.
Some insurers also include this whole other set of (marginally more cheerful) conditions that can be considered Presumptive TPD as well:
As a result of disease, illness or injury the Life Assured becomes totally and permanently unable to perform at least three (3) of the following six (6) “Activities of Daily Living” even with the aid of special equipment, and always to require physical assistance of another person throughout the physical activity for at least six (6) continuous months.
a. Transferring: the ability to move from a bed to an upright chair or wheelchair and vice versa
b. Mobility: the ability to move indoors from room to room on level surfaces
c. Toileting: the ability to use the lavatory or otherwise manage bowel and bladder functions so as to
maintain a satisfactory level of personal hygiene
d. Dressing: the ability to put on, take off, secure and unfasten all garments and as appropriate, any
braces, artificial limbs or other surgical appliances
e. Washing: the ability to wash in the bath or shower (including getting into and out of the bath or
shower) or wash satisfactorily by any other means
f. Feeding: the ability to feed oneself once food has been prepared and made available
The diagnosis must be confirmed and certified by a Registered Medical Practitioner.
As always, we take matters in our own hands to simplify stuff:
- These conditions must be caused by disease, illness, or injury. Laziness does not count!
- An inability to perform at least 3 out of these 6 crucial activities of life.
You might have noticed that these conditions are more “relaxed” than the whole severance conditions presented before. One possible condition that we can think of is severe Parkinson’s disease or some motor neurone related diseases. (Co-incidentally, claimable via Critical Illness cover as well.)
That’s the first definition.
TPD Definition 2: The Morgan Freeman
Again, Morgan Freeman lets us have fun while dealing with a traditionally dry topic. Thus named because this definition reminds us of the man: Slightly drawling yet articulate, strong yet soothing.
Also officially known as Occupational TPD.
It is so named because it is considered fulfilled if you cannot take up an occupation. Any occupation, mind.
A sample wording might be as such:
A Disability which is total and permanent and persists continuously for at least six (6) months, with the Life Assured incapable of performing any work or engaging in any occupation or profession to earn or obtain wages, compensation or profit, from the time when the disability started.
Our simplification goes like this:
If you cannot work at all for at least 6 months, you qualify.
Food for thought: Is begging considered an occupation? This question begs (pun intended) to be answered.
Short and sweet, and you can tell that this is even far more relaxed compared to Definition 1. When it comes to claims, it makes a world of difference.
So now you know
Not all policies are created equal. In fact, some policies include both definitions, others only use one. Once you know what to look out for, you have a far better understanding the finer clauses that are in the policy documents – so you know what exactly to expect when it comes to claims.
Knowing more never hurt anyone.
And we make it easy to know a lot more.
This explanatory article was inspired and made possible by Jiale, who helped us as a subject matter expert. He created a series of videos to talk about financial planning as a whole, called the MoneyMap series.
You can catch the episode which caught our attention and made us want to delve deeper:
For more than half a decade, Jiale’s passion has been guiding families and individuals with plainspoken, no-nonsense financial advice, and Investment is his forte. Presently working with over 300 families across SEA, he serves them through personal consultations, client seminars and insurance videos.
Jiale presently holds the highest financial advisory title of Senior Executive Financial Planner.
He also confesses to liking the Clearly Surely brand of humour, which was the main reason he agreed to be featured.
If, like Jiale, you have knowledge to share, or a story to tell, or even questions about Life Insurance, feel free to reach out to us here.
www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.