Occupation Definitions influence insurance cost and benefit
This article addresses the issue of particular definitions applying to your occupation for TPD and IP insurance contracts. Whilst your occupation will impact on the premium you will pay for other forms of life insurance, such as –
- Total and Permanent Disability (TPD),
- Income Protection (IP),
- Business Expense (BE), and
- Key Person Insurance,
only TPD and IP insurances that have the occupation defined for the purpose of a claim against these policies.
The claims-based definitions are ‘any occupation’ and ‘suitable occupation’.
Any Occupation or Suitable Occupation: do you know which occupation definition you have in your policy?
It can make a BIG difference!!!
TPD and IP Insurance policies provide financial protection from personal risk issues. Used together, they strategically provide financial support when needed. That is, at times when income is interrupted by illness, accident or other debilitation.
TPD insurance is paid as a capital sum after a qualifying period of disability. The occupation definition agreed on your policy application documentation determines the claim benefit amount payable.
IP insurance is paid as regular income instalments. Under most policies, these claim payments are received on a monthly basis throughout the claim period. The first payment is receivable 30 days after the contracted waiting period is satisfied.
Those claims-based occupation definitions
Note that the following information is generic only. You should gain an understanding of the terms specific to the insurer to whom you intend transferring your financial risk before acceptance.
Any Occupation. Acceptance of the ‘any occupation’ definition places the insurer is at less risk of having to pay claims. Why would that be so? That is because if you are able to work within the qualifying period –
- at any task for which you are suited because of education, training or experience, then
- the insurer can require that you accept such a position.
Suitable Occupation. The risk to the insurer is higher if your policy is written with the ‘suitable occupation’ definition. If you are unable to perform certain tasks considered suitable to –
- your physical ability, retraining, or experience
- in the qualifying period stated in the policy documentation,
- the claim becomes payable.
The cost impact of the occupation definitions
As you will have imagined, the cost of a policy with an ‘own occupation’ definition will be higher than the cost of one that relies on the ‘any occupation’ definition. (The cost differential in the premiums for the respective policies will be greater if the occupation is fairly generic in any event – and in fact, own occupation definition isn’t available for all occupation types.)
Changing claim-base type in existing policies
If you have protection in existence and the existing definition is not adequate for your needs (or if you are unsure as to whether the definitions governing your policy are best for your circumstances), please contact us to arrange a review of your insurance portfolio.
Taking our advice
The experienced advisers at Continuum Financial Planners Pty Ltd have dealt with the main Australian insurers over an extensive period of time. The clients we have represented have a range of specific needs and challenges for which protection has been provided.
To make an appointment to meet with one of our team –
- phone our office on 07-34213456, or
- at your convenience, use the linked Make A Booking facility.
Our advisers work to the mantra that – ‘we listen, we understand; and we have solutions’. Arrange your meeting for personalised, professional wealth management advice tailored to your needs.
Other general information about TPD and IP insurance policies
Continuum Financial Planners Pty Ltd website Library has a number of articles about these insurance types. The following articles are commended for further understanding of their use and the protection they offer to manage financial risk that you are unable (or unwilling) to carry yourself:
- TPD is Total and Permanent Disability Insurance
- Outsourced Wealth Protection – Provision
- Income Protection insurance – some questions answered
- Personal risk insurance is Income Protection
- A claim about insurance claims paid
- Insurance Reviews
(This article was first posted by us in October 2014. It has occasionally been refreshed/ updated, most recently in February 2025.)