What is TPD insurance in super, and when does it pay?
TPD (total and permanent disability) pays a lump sum if illness or injury leaves you unlikely ever to work again in any job you're reasonably suited to. Inside super you usually wait three to six months off work first, and the payout is taxed.
TPD is the cover people understand least and most often assume is broader than it is.
What the definition says
Super fund TPD is an "any occupation" test. It asks whether you're unlikely ever to work again in any job that suits your education, training or experience. It does not ask whether you can return to your own job.
So a surgeon who can't operate any more but could teach may not qualify. A tradie with a wrecked back who could realistically do office work may not either.
"Own occupation" TPD, which pays if you can't do your own job, can't be bought inside super since 1 July 2014. A few funds still carry a legacy version for older members. Outside super, retail policies can include it, usually at a higher price.
How long you wait
You can't claim the moment you're injured. Funds want to see that the condition has lasted. Rest asks for six consecutive months off work, up from three. HESTA requires you to be unable to do any work for three consecutive months before the suited-occupation test applies. Check your fund's guide, because the clock and the wording differ.
If you weren't working
If you weren't working when you became ill, many funds switch to a different test. Rest's, for example, looks at whether you can perform a set of everyday work activities, or have a severe mental illness or cognitive impairment. AustralianSuper assesses differently if you were out of work for 16 months or more before the disablement. Having a long gap before an illness changes what you have to prove.
How much you get
It's often smaller than people expect, and it falls with age. AustralianSuper's automatic TPD is about $53,000 at 35 and $9,000 at 55. Hostplus's is about $170,000 at 35 and $39,000 at 55. Cover also stops earlier than Death at several funds: at 65 for AustralianSuper and Cbus, 67 at Australian Retirement Trust, and 70 at Hostplus and Rest.
Tax on the payout
TPD paid from super is a lump sum. Part of it is tax-free because of an uplift for the years you won't work before 65, and the rest is taxed at up to 22% including Medicare if you're under 60. How much is tax-free depends on your eligible service date, which is on your super statement.
For a $500,000 payout at age 40, the tax would be about $18,000 with five years of eligible service and about $49,000 with 20 years. Here's how that's worked out. These are estimates, and your own figure depends on your own service date.
How often TPD claims are accepted
TPD is where super insurers decline the most. In the 12 months to 30 June 2026, group super insurers accepted 88.5% of TPD claims they finalised, against 98.5% for Death. Acceptance ranged from 78.4% at one insurer to 93.0% at another, and the average time to decide was about 3.7 months. The full figures are here.
Is it worth having?
If anyone depends on your income, TPD can be the cover that stops a disability turning into a debt crisis. Whether you need it, and how much, depends on your debts and whether you also hold income protection. For one sample family, holding income protection to age 65 cut the TPD they needed from $1.48 million to $875,000. See how that works.
Sources
- APRA and ASIC, Life insurance claims and disputes statistics, June 2026, group super channel
- Fund insurance guides (Rest, HESTA, AustralianSuper, Hostplus, Cbus, Australian Retirement Trust) as at 22 October 2026
- Tax calculation: miadvice needs analysis, 2026-27 rates, applying the disability super benefit rules in Income Tax Assessment Act 1997 s 307-145
See each fund's automatic TPD cover
Free, no sign-up. Uses each fund's published rates and rules.
General information only, not personal advice. Fund rules and premiums change, usually on 1 July or 1 October. Check the fund's current insurance guide before relying on a figure here.