Re-thinking TPD: Why Severity Matters More Than Ever

Financial Newswire Contributor

1 June 2026

For decades, Total and Permanent Disability insurance has been built around a simple idea: if a client can never work again, the policy should step in. But as work, medicine and recovery have evolved, that simplicity has become harder to apply in practice.

Today’s claims environment is marked by greater subjectivity, longer disputes and affordability pressure, leaving advisers to balance protection, cost and client expectations more carefully than ever.

Acenda Life’s Chief Growth Officer, Gerard Kerr, argues that traditional TPD  has drifted into grey areas where disagreement about duties, employability and suitability can overshadow the original purpose of the cover – which is why TPD Severity was created, as subjectivity needed to be tackled and the design of the benefit needed to adapt to reflect medical advances and today’s modern workforce.

From occupation to severity

Traditional TPD definitions focus on work capacity – whether a client can return to their own role or to any role suited to their education, training or experience. TPD Severity takes a different approach, using recognised medical impairment benchmarks such as Whole Person Impairment and Psychiatric Impairment Rating Scales once a client has reached maximum medical improvement. Acenda Life took the view that it was better to tap into the latest diagnostic rating criteria from medical specialists – and use their expertise to set the qualifying levels in TPD severity.

The aim is to introduce greater objectivity into claims assessment, particularly for complex physical and mental health conditions.

Why advisers are blending cover

Importantly, TPD Severity is not designed to replace Any or Own Occupation TPD. Instead, it is intended to sit alongside them.

For advisers, this creates more flexibility in how cover is structured. Clients may retain some traditional (Any or Own) TPD for income replacement and career disruption, while allocating a portion of their total TPD cover to TPD Severity-based cover that responds to clear catastrophic medical thresholds. This helps align cover with both budget constraints and severity risk.

Kerr notes this also raises the bar for advice quality. Trade-offs need to be explained clearly, documentation needs to be strong, and clients need to understand which risks are covered under which definitions.

Supporting affordability and retention

Affordability remains one of the biggest threats to client’s retaining cover. Rising claim incidents and costs, particularly in musculoskeletal and mental health categories, have contributed to higher premiums across the industry, resulting in reduced sums insured or total lapses in cover for some clients.

Having the option to split benefits between traditional TPD and TPD Severity, advisers can support maintaining meaningful protection while easing premium pressure.

Retention through clearer expectations

Just as importantly, TPD Severity-based cover, with its focus on greater medical impairment benchmarking can help set clearer expectations.

By anchoring TPD Severity to objective medical measures, advisers and their clients have greater transparency around how and when benefits are assessed. That transparency can help reduce disputes, complaints and disappointment over time.

A stronger advice framework

For advisers focused on retention, TPD Severity is less about a new product and more about an additional framework for broader advice, and alternative solutions.

It supports clearer conversations, more thoughtful cover structuring and better long-term client outcomes. In an environment shaped by affordability pressure, that clarity matters.

Check out the full interview here.