The number of conditions and coverage offered by critical illness plans has increased dramatically over the last 30 years. The main reason for this is due to providers wanting to pay more claims, however invariably there are times where a client is seriously ill but their condition does not fit into one of the definitions offered by their insurer. Total Permanent Disability (TPD) was originally introduced to Critical Illness policies to offer more overall protection in circumstances when a client suffers a debilitating injury or illness that might not meet the criteria of the definitions covered by a insurer and in this article we take a deeper look into what each insurer offers and when.
All providers offer TPD on their critical illness plans, with the majority providing it as an optional extra that will incur additional costs. The benefit is designed to pay out the full sum assured on a plan if the client becomes permanently incapacitated and meets the definition determined by the provider.
Providers may have their own particular wordings but in general the definitions offered will fall into four main categories with a new additional definition introduced relatively recently:
Total Permanent Disability – Own occupation: The person covered is permanently unable to perform their own job as a result of illness, injury or mental incapacity (i.e. the job before they were incapacitated).
Total Permanent Disability – Any or suited occupation: The person covered is permanently unable to perform any occupation or an occupation suited to the client’s experience and qualifications as a result of illness or injury (i.e. not necessarily their own occupation).
Total Permanent Disability – Activities of Daily Living (Working Tasks or Living Tasks): The person covered is permanently unable to perform a number of living or working tasks as a result of illness or injury. For example, providers may need the client to be unable to perform 3 of the working tasks or 3 of the living tasks (depending on the definitions confirmed within the proposition). These tasks can include walking a certain distance, bending, getting in and out of a car, being able to write etc. In recent times insurers have also added mental failure as part of this.
Total Permanent Disability – Severe Mental Incapacity: The person covered requires permanent supervision due to either severe mental illness, brain disease or brain injury.
Not all providers offer all four of the confirmed main definition categories as part of their TPD proposition as confirmed below:
It is clear that an own occupation definition is preferable to the others. Depending on the client’s occupation however, they may not be able to obtain cover on an own occupation basis. Also, dependent on the clients’ health or occupation an insurer may offer an Any/Suited occupation or activities of Daily Living/Specified Tasks definition which in general will be much harder to claim on. In more severe cases some insurers may decline to offer total permanent disability at all.
Whilst most clients may be offered an own occupation defintions at outset of the plan the definition used if the client is required to claim will be dependent on whether they are still working. If the client stops working during the course of the plan an own, any or suited occupation definition would become invalid and therefore the provider should be notified. The provider should then either remove the TPD from the plan altogether or revert to Activities of Daily Living/work tasks definition and adjust the premiums accordingly.
Another significant area to understand when considering the merits of the TPD benefit for older clients or clients with a long term, is knowing when the benefit will expire. Some providers will offer total Permanent Disability until the end of the policy where others will provide the benefit to a specific age. This is particularly important for clients who continue to work into later life as some insurers may stop offering TPD on an own occupation basis at earlier ages and switch to either an ADL or specified tasks definition.
*Vitality will pay the full sum assured if a client is unable to carry out at least four work tasks before the age of 65 and the full sum assured if they are unable to complete at least four tasks designed to assess whether they can look after themselves again (at any age). If the client is unable to carry out two work tasks before the age of 65 or unable to complete two tasks designed to assess whether they can look after themselves again (at any age) they will pay 50% of the sum assured.
Unlike most critical illness conditions, to be able to claim on TPD there must be evidence that the disability is permanent. As such insurers will generally not pay a claim for six months unless there is medical evidence to prove the permanent nature of the condition.
Due to the extra costs often involved in including TPD it may not be suitable for everyone. This aside it does provide additional cover over and above the standard definitions offered by providers and for those that have a condition that does not meet these definitions, it could be a financial lifeline.
Overall, Canada Life, Guardian, Legal & General, LV= and Scottish Widows are worth noting as they offer TPD on an own occupation basis for the entire term of the plan. It is also worth highlighting Guardian, Royal London and Vitality for covering the client for severe mental incapacity within their Total Permanent Disability cover.