Total and permanent disability (TPD) insurance
If an illness or injury meant you could never work again, how would your family manage? TPD insurance pays a lump sum to help clear debts and fund the changes life would need.
Total and permanent disability (TPD) insurance pays a lump sum if illness or injury leaves you permanently unable to work. It can help pay off your mortgage and fund things like home modifications, ongoing care or a partner reducing work to support you.
Reviewed by Kyle Hasson, Insurance and KiwiSaver Adviser (FSP1010252) · Updated October 2026
How we help
- Choose the right definition: own occupation or any occupation.
- Set the right amount: debts plus the costs of living with a disability.
- Structure it well: standalone or linked to your life cover.
- Fit it with income protection: which covers the time before a disability is known to be permanent.
Own occupation or any occupation?
| Own occupation | Any occupation | |
|---|---|---|
| Pays if | You can’t do your own job | You can’t do any job suited to your training and experience |
| Ease of claim | Easier | Harder |
| Cost | Higher | Lower |
Not every occupation is eligible for own-occupation cover, and definitions vary between insurers.
TPD versus income protection
Income protection pays monthly while you recover. TPD pays a lump sum when recovery isn’t expected. They often work together: income protection supports you while doctors assess your condition, then TPD can pay once it’s clear the disability is permanent.
Sources and further reading: ACC: what ACC covers
When does TPD insurance pay?
TPD pays a lump sum if you’re unlikely to ever work again because of illness or injury. Under most policies you can qualify in one of several ways:
- Unable to return to work: usually after at least three months off work, with medical evidence that you’re unlikely ever to return.
- Loss of use: permanent loss of use of both hands or both feet, sight in both eyes, or a combination such as one hand and one eye.
- Daily living: being permanently unable to do two or more everyday activities, such as washing, dressing or eating, without help.
- Cognitive loss: a permanent loss of thinking and memory that means you need ongoing care.
Cover for stay-at-home parents
Some policies have a “home duties” definition for people who work full-time at home caring for their family. It assesses whether you can still do normal household tasks, so stay-at-home parents can be covered too.
What happens to TPD cover as you get older?
TPD definitions often change with age. With many policies, the work-based tests stop at around 65, and from then the claim is assessed on everyday living activities instead. Some TPD options end altogether at 65, so check the age rules before you rely on it for later life.
Accelerated or standalone TPD
Accelerated TPD is linked to your life cover. A TPD payout reduces your life cover by the same amount, which keeps premiums lower. Standalone TPD is separate, so your life cover stays in place, but it costs more. Insurers also cap the total TPD cover you can hold across all insurers, commonly at around $5 million.
Kyle Hasson is an Insurance and KiwiSaver Adviser at Moneyplant in Papakura (FSP1010252), with a New Zealand Certificate in Financial Services (Level 5). Meet the team
This is general information only and isn’t personalised financial advice. Everyone’s situation is different, so please talk to one of our advisers before making decisions about your insurance.
TPD insurance questions
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Is TPD the same as income protection?
No. Income protection pays monthly while you can’t work. TPD pays a one-off lump sum if you’re permanently unable to work.
Can I get TPD on its own?
Often, yes. It can be standalone or linked to your life cover. Linked TPD usually reduces your life cover if you claim.
How much TPD cover do I need?
Many people aim to clear their mortgage and other debts, plus an amount for home modifications, care or lost earnings not covered by other policies.
Does ACC cover permanent disability?
Only if it was caused by an accident, and ACC’s support may not cover everything your family needs. TPD insurance also covers illness.
How long do I need to be off work to claim TPD?
Usually at least three months, with medical evidence that you’re unlikely to ever return to work. Loss-of-use and daily-living claims can be made without a minimum time off.
Can a stay-at-home parent get TPD cover?
Yes. Some policies have a home duties definition that looks at whether you can still do normal household tasks, rather than paid work.
What happens to TPD cover at 65?
Many policies change the definition at around 65 to a daily-living test, and some TPD options end at 65. The rules vary by insurer.
Is a TPD payout taxed in NZ?
TPD payouts on personal policies are generally not taxed as income in New Zealand. Business-owned cover can be different, so check with your accountant.
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