TPD Insurance Calculator Australia

Use this calculator to estimate how much Total and Permanent Disability (TPD) insurance cover you may need. TPD pays a lump sum if illness or injury permanently stops you from working, so the cover should be enough to clear debts, replace income and pay for care.

What TPD cover should include

A common way to size TPD cover is to add up what a permanent disability would cost your household and subtract what you already have:

• Debts to clear: the mortgage and any other loans, so your family keeps the home without repayments.
• Medical, rehabilitation and home modifications: treatment and making the home accessible.
• Income replacement: enough to replace your income for the number of years until you would have retired or your partner can support the household.
• Dependants' future costs: education and raising children.

From that total you subtract your existing TPD cover (often some is held inside super) and your super and savings. What is left is roughly the additional cover to consider.

How the calculator works

Enter your debts, income and the years of income to replace, plus medical and dependants' costs, then your existing cover and savings. The calculator adds the needs, subtracts your resources, and shows the estimated cover, with a breakdown of what is driving it.

TPD inside super

Many people hold some TPD cover automatically through their super fund. It is usually cheaper there, but the default amount is often lower than a full needs estimate, which is why checking the gap matters. Note that claiming TPD from super can have tax consequences on the benefit.

There is also a structural point worth understanding: cover held through super is paid to the fund first, then released to you, and it can only be released if you meet a super condition of release, which a permanent disability usually satisfies. Holding cover this way preserves cash flow because premiums come from your super balance rather than your take-home pay, but that convenience quietly erodes your retirement savings over the years. A common approach is to split cover: keeping the more affordable base amount inside super and topping up the shortfall with a retail policy held outside it.

A worked example

Take Daniel, 45, on A$110,000 a year with a young family. He wants income replaced until his planned retirement at 65, which is 20 years, though he scales that back to a more affordable 10 years in the calculator. His inputs:

• Debts to clear: A$420,000 mortgage.
• Medical, rehabilitation and home modifications: A$80,000.
• Income replacement: A$110,000 × 10 years = A$1,100,000.
• Dependants' future costs: A$120,000 for the children's education.

That totals A$1,720,000 of need. Against it he offsets A$150,000 of default TPD cover already held inside his industry super fund, plus A$250,000 in super and savings, which is A$400,000 of resources. The calculator shows an additional cover need of about A$1,320,000. Seeing that his super default covers less than a tenth of the need is the whole point of running the numbers.

Own occupation versus any occupation

One definition can double or halve the chance of a payout. An own occupation policy pays if you can no longer work in your specific job; an any occupation policy pays only if you cannot work in any job suited to your training and experience. Cover held inside super is almost always the stricter "any occupation" type because of superannuation law. This calculator sizes the dollar amount you may need, but the definition attached to that cover is just as important: a large sum under a hard-to-meet definition can be worth less than a smaller sum that actually pays.

Common mistakes to avoid

• Relying on the super default. Automatic cover is convenient but is rarely sized to your mortgage and family, and it can reduce or stop at older ages.
• Ignoring tax on a super payout. A TPD benefit paid from super can be taxed depending on your age and service period, so the gross figure is not always what lands in your account.
• Double-counting resources. Do not count savings you would still need for everyday living as though they are all available to offset the cover.
• Setting and forgetting. As the mortgage falls and children become independent, the need shrinks; review it periodically.

Interpreting your result

Read the additional-cover figure as a ceiling to discuss, not a target to buy in full. Some of the need, clearing the mortgage for instance, might instead be covered by your partner continuing to work, by downsizing, or by drawing on super at retirement age. The value of the estimate is that it makes the trade-offs explicit: if the gap is A$1.3 million, you can decide consciously how much of that risk to insure against and how much to self-fund, rather than discovering the shortfall only after a claim. Re-running it with different income-replacement periods shows how sensitive the number is to that single assumption, which is usually the largest driver of the total.

Assumptions and limitations

This is a needs estimate to start a conversation, not a recommendation. It does not model the "own occupation" versus "any occupation" definitions, premiums, or tax on benefits. It also does not adjust income replacement for inflation, investment returns on the lump sum, or a partner's earnings. Your real need depends on your circumstances.

This is general information, not financial advice. Speak to a licensed adviser before deciding on cover.

About This TPD Insurance Calculator

Use this TPD insurance calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.