Total and permanent disability insurance insures you in the event you become totally and permanently disabled and are therefore unable to work again.

If you have a total and permanent disability insurance policy and you make a claim, the policy will pay the benefit as a lump sum amount. This payment could be used to assist with one or more of the following: debt reduction; income generation; home and lifestyle modifications; and immediate and ongoing medical expenses.

Total and permanent disability insurance can be taken out alongside life insurance (called a rider) or as a separate policy.

It's important to read the Product Disclosure Statement of the insurance policy to establish what the definition of total and permanent disability is.

Generally, there are two main definitions of total and permanent disability for you to be aware of – any occupation and own occupation.

Total and permanent disability insurance premiums taken outside of superannuation are generally not tax deductible. However, total and permanent disability insurance benefit payments received from a successful claim are generally not assessable to tax.