Sustainability Reimagined: TAL’s new approach to TPD affordability

Content Partnership

6 July 2026

Across the life insurance industry, premiums for TPD insurance have risen significantly in recent years, adding to the financial pressure many Australians are already facing from higher living costs. For advisers and their clients, the conversation has been shifting, from “how much cover do I need” to “can I afford to keep my cover”. This dynamic reflects a deeper structural challenge with TPD across the Australian Life Insurance industry.

TAL’s response has been to introduce the TPD Support Option (TSO) which launched last year – a new option that can be added to a traditional TPD benefit. TSO takes a new approach, providing support in a different way for conditions like mental ill-health, fatigue and functional disorders where the recovery journey can be uncertain. For claims outside these conditions, the traditional structure remains in place, with a lump sum payable. For conditions where recovery may be possible, TSO offers up to five partial payments of their TPD benefit assessed yearly, maintaining a connection to the customer’s recovery as it unfolds.

Global reinsurer Swiss Re has recently called for more sustainable product design in Australia, pointing to CALI data showing mental health-related TPD claims had nearly doubled in five years to reach $2.4 billion in 2024¹.

Michael Paff, Head of Life & Health Client Markets and Product at Swiss Re Australia & New Zealand says “Awareness of mental health has increased significantly across Australian society, and we’ve seen that as a major contributor to a rise in TPD and income protection claims. That is putting additional pressure on affordability.”

Swiss Re has been clear in its assessment that the industry must transition from the sole focus of claims payment to partnering on an individual’s health journey.

“The insurable need remains, but there are opportunities to design products differently. Staged payment products can make cover more accessible and affordable, while still providing the safety net that Australians require. It very much goes to the underlying support needs of the client and paying out the full benefit if that is required given the individual’s health journey,” says Michael Paff.

The numbers tell the story. Over the last ten years the number of Australians accessing some form of income support has grown from 6.5 million to 8.5 million, with mental health conditions increasingly a reason for seeking this support².

At the heart of the TPD challenges is a structural one. Traditional TPD, which still provides vital protection for many Australians, is built around a binary outcome – a person was either permanently unable to work or they weren’t.  For many severe injuries and many serious illnesses, that remains exactly the right framework. But this doesn’t always reflect the reality of how many conditions present today – particularly mental ill-health, which now account for around a third of all TPD Claims. Advances in understanding, recovery and rehabilitation mean that returning to meaningful work is possible for many.

It’s this structural challenge that TAL’s General Manager of Pricing and Value Management, Nabet Sedghi, and the TAL team set out to address in developing the TSO.

“TPD claims have risen markedly in recent years as the current benefit design has not adapted fast enough to changes in our society. As the industry has had to adjust its forward-looking assumptions to reflect more claims being paid in the future, premiums have had to rise to cover this. It is not a sustainable trajectory over time unless new solutions are developed,” says Sedghi.

TAL has not been immune from these pressures and TSO is the result of going back to first principles to understand what the data was saying.

“As part of the product and pricing design, we undertook extensive research and analysed our claims portfolio to better understand the nature and profile claims for mental ill-health and those conditions that would fall under the TSO category,” says Sedghi. “The insights from this work allowed us to design a more fit-for-purpose benefit that considered how recovery patterns vary and better tailor payments to the underlying condition.”

Because TSO is built differently, it is priced differently – and that difference is meaningful. Many Australians took out TPD cover when premiums were lower and are now facing price increases, adding to the pressure of higher housing costs and other living essentials. For advisers, the conversation has become less about which product to choose and more about whether clients can afford to keep their cover.

“The TSO provides advisers a meaningful alternative TPD option for their clients that will help reduce the impact of TPD premium increases. It’s priced using our extensive data assets and we’re confident it will be an important feature in advice considerations going forward.” says Sedghi.

This approach is expected to improve the long-term sustainability of the TPD benefit, while also delivering real value back to customers through lower premiums. The lower price of TSO reflects its design, structuring the benefit in a way that better aligns with how these conditions are experienced by customers.

TSO is available for new TAL Accelerated Protection applicants now and will soon also be available for eligible existing TAL customers from August 2026. For more information on TSO, please visit https://adviser.tal.com.au/products/tpd-support-option

Content Partnership sponsored by TAL 

References

1. CALI/KPMG (2024), Mental Health Dashboard, includes Group and Retail.
2. Cross Sector Project Update: Mapping Australia’s ecosystem of income supports, SuperFriend (commissioned by the Council of Australian Life Insurers)