Article
30 September 2025
Reimagining TPD for modern Australia
First published in Independent Financial Adviser on 29 September 2025
Total and Permanent Disability (TPD) insurance has long been a cornerstone of financial protection for Australians facing life-altering health challenges. When these catastrophic events happen, TPD cover provides crucial financial support for people unable to ever return to work due to total and permanent disability.
But as the nature of work, medicine, technology and recovery evolves, it’s time to critically reassess TPD cover and ensure products adapt to meet the realities of today’s world. As an industry, we must step up and provide alternative TPD solutions to meet the evolving needs of customers, especially as rising claims continue to drive higher premium rates higher for new and existing customers.
We have seen this story before. The industry faced similar challenges in recent years with rising claims and increasing premiums threatening the sustainability of income protection insurance, which eventually led regulators to step in and drive change.
We must learn from this experience and the industry should develop the solutions that continue to deliver valuable, affordable disability cover that meets the needs of Australians today.
That’s why Acenda is taking the lead with the launch of a new TPD Severity option, that provides advisers and their clients with greater choice and delivers more clarity and objectivity through the use of medical impairment benchmarks.
A benefit for its time
Historically, TPD insurance covers people for total and permanent disability with claims typically assessed on whether someone can return to their actual occupation (known as ‘own occupation’) or perform in another occupation suited to their education, training or experience (known as `any occupation’).
These definitions were created decades ago, when our workforce was more heavily employed in manufacturing, farming and mining. Disability was largely viewed through the lens of physical injury, occupational health and safety received little attention, and machinery had the ability to severely maim or kill people doing manual jobs.
These events were catastrophic and life altering and the TPD benefit was designed to help people adapt to their new reality, often requiring significant lifestyle changes like home modifications and lifelong medical care with no ability to return to paid employment.
What’s changed?
Life altering events still occur, however advances in medicine and recovery, societal shifts, and the changing nature of work (including the influence of technology), are creating ‘grey’ conditions where it can be difficult to determine whether a person has the capacity to never work again.
Today, around four in every five Australian workers are employed in a service industry where there is a lower risk of catastrophic injury occurring in the workplace. Yet claims are rising, particularly for musculoskeletal and mental health conditions.
Between 2018 and 2023, Acenda reported a 166 per cent increase in retail TPD claims for musculoskeletal conditions. During the same period, Acenda reported a 171 per cent increase in retail TPD claims for mental illness.
Over time, awareness and insights into the breath, depth, and complexity of these conditions has advanced, with recognition that they can be episodic in nature and fluctuate in severity. Advances in treatment and rehabilitation mean that recovery is sometimes possible, even after long periods of disability.
To define someone in this situation as “total” and “permanent” in a short space of time is difficult and often not beneficial long-term. It is critical that any medical condition that reaches a stage of permanency must be assessed by a medical specialist.
Towards a more sustainable and stable solution
As TPD claims increase, so too does the cost of TPD premiums. TPD Cover is becoming increasingly unaffordable for many Australians, with many opting out, leaving them vulnerable should the worst happen.
To address these challenges, the industry must embrace a modern approach that provides Australians with greater clarity and flexibility within their cover and supports ongoing affordability.
Acenda’s TPD Severity option allows financial advisers to tailor cover to suit their clients’ needs by mixing and matching the levels of TPD Severity with the customer’s preferred level of any or own cover.
TPD Severity uses objective, scientific-based assessments commonly used by the medical profession (including the Psychiatric Impairment Rating Scale and Whole Person Impairment) to measure what is classified ‘total’ and what is ‘permanent’ bringing much greater clarity to a space that has long been subjective. This ensures disability insurance remains meaningful for customers and is aligned with the nature of the modern-day work environment and into the future.
Greater choice and affordability
For many people, traditional TPD cover will continue to provide an important safeguard for those who want or need protection from permanent incapacity. Catastrophic accidents and illnesses do happen and TPD insurance ensures individuals and their families have financial security during the most challenging times of their lives.
But the nature of disability and work has evolved significantly, and our insurance frameworks need to evolve with it. Long-term change will take time but we’re proud to be at the forefront of product innovation, tackling industry challenges with an option that brings advisers and their clients more choice and better affordability, while maintaining protection that gives Australians the confidence to take life on.
Gerard Kerr is Chief Executive, Individual Insurance, for Acenda
Total and Permanent Disability (TPD) insurance has long been a cornerstone of financial protection for Australians facing life-altering health challenges. When these catastrophic events happen, TPD cover provides crucial financial support for people unable to ever return to work due to total and permanent disability.
But as the nature of work, medicine, technology and recovery evolves, it’s time to critically reassess TPD cover and ensure products adapt to meet the realities of today’s world. As an industry, we must step up and provide alternative TPD solutions to meet the evolving needs of customers, especially as rising claims continue to drive higher premium rates higher for new and existing customers.
We have seen this story before. The industry faced similar challenges in recent years with rising claims and increasing premiums threatening the sustainability of income protection insurance, which eventually led regulators to step in and drive change.
We must learn from this experience and the industry should develop the solutions that continue to deliver valuable, affordable disability cover that meets the needs of Australians today.
That’s why Acenda is taking the lead with the launch of a new TPD Severity option, that provides advisers and their clients with greater choice and delivers more clarity and objectivity through the use of medical impairment benchmarks.
A benefit for its time
Historically, TPD insurance covers people for total and permanent disability with claims typically assessed on whether someone can return to their actual occupation (known as ‘own occupation’) or perform in another occupation suited to their education, training or experience (known as `any occupation’).
These definitions were created decades ago, when our workforce was more heavily employed in manufacturing, farming and mining. Disability was largely viewed through the lens of physical injury, occupational health and safety received little attention, and machinery had the ability to severely maim or kill people doing manual jobs.
These events were catastrophic and life altering and the TPD benefit was designed to help people adapt to their new reality, often requiring significant lifestyle changes like home modifications and lifelong medical care with no ability to return to paid employment.
What’s changed?
Life altering events still occur, however advances in medicine and recovery, societal shifts, and the changing nature of work (including the influence of technology), are creating ‘grey’ conditions where it can be difficult to determine whether a person has the capacity to never work again.
Today, around four in every five Australian workers are employed in a service industry where there is a lower risk of catastrophic injury occurring in the workplace. Yet claims are rising, particularly for musculoskeletal and mental health conditions.
Between 2018 and 2023, Acenda reported a 166 per cent increase in retail TPD claims for musculoskeletal conditions. During the same period, Acenda reported a 171 per cent increase in retail TPD claims for mental illness.
Over time, awareness and insights into the breath, depth, and complexity of these conditions has advanced, with recognition that they can be episodic in nature and fluctuate in severity. Advances in treatment and rehabilitation mean that recovery is sometimes possible, even after long periods of disability.
To define someone in this situation as “total” and “permanent” in a short space of time is difficult and often not beneficial long-term. It is critical that any medical condition that reaches a stage of permanency must be assessed by a medical specialist.
Towards a more sustainable and stable solution
As TPD claims increase, so too does the cost of TPD premiums. TPD Cover is becoming increasingly unaffordable for many Australians, with many opting out, leaving them vulnerable should the worst happen.
To address these challenges, the industry must embrace a modern approach that provides Australians with greater clarity and flexibility within their cover and supports ongoing affordability.
Acenda’s TPD Severity option allows financial advisers to tailor cover to suit their clients’ needs by mixing and matching the levels of TPD Severity with the customer’s preferred level of any or own cover.
TPD Severity uses objective, scientific-based assessments commonly used by the medical profession (including the Psychiatric Impairment Rating Scale and Whole Person Impairment) to measure what is classified ‘total’ and what is ‘permanent’ bringing much greater clarity to a space that has long been subjective. This ensures disability insurance remains meaningful for customers and is aligned with the nature of the modern-day work environment and into the future.
Greater choice and affordability
For many people, traditional TPD cover will continue to provide an important safeguard for those who want or need protection from permanent incapacity. Catastrophic accidents and illnesses do happen and TPD insurance ensures individuals and their families have financial security during the most challenging times of their lives.
But the nature of disability and work has evolved significantly, and our insurance frameworks need to evolve with it. Long-term change will take time but we’re proud to be at the forefront of product innovation, tackling industry challenges with an option that brings advisers and their clients more choice and better affordability, while maintaining protection that gives Australians the confidence to take life on.
Gerard Kerr is Chief Executive, Individual Insurance, for Acenda