When it comes to paying benefits, total and permanent disability insurance can be a little more confusing than other types of insurance policies. That's because a condition might be covered for one policyholder but not another. Let's look at why.

The foundation of total and permanent disability insurance policies is that they cover you should you become permanently disabled and unable to work. That's the key -- your ability (or lack thereof) to continue working. While a certain condition might mean someone else can't return to work they're qualified to do, it doesn't mean the same is necessarily true for you or other policyholders.

What Counts as "Out of Work?"

Insurance companies each have their own rules as to what it means to be "out of work" when it comes to making payments on total and permanent disability insurance policies. Some, for example, will pay on the claim if you're unable to return to your specific previous line of work. Others however won't pay out on the policy if there's any type of job that you're still qualified to do even with your disability.

Let's assume we're talking about a policy that pays out if you can't return to your specific line of work and look at two examples. In each case, the person suffers from the same disability, but in one case the person might be eligible for payment and in the other case they likely wouldn't be. Let's say the permanent disability in this case is the loss of both legs.

• Person A -- The first person who lost their legs (or the use of them) is a delivery driver. Their legs are vital to their work, not only to drive the delivery truck but to unload deliveries at their destination. The loss of their legs would likely permanently put them out of their line of work, so they'd have a decent chance of receiving a payment from their total and permanent disability insurance plan to help them meet their medical and living expenses.
• Person B -- This individual is an administrative assistant who works behind a desk all day, mostly typing and being on the telephone (with other light office duties like making copies, which could be done with the help of a wheelchair). Even though this person suffered the same disability as Person A, because they could likely continue in their previous line of work after an initial recovery period, they would have less of a chance of receiving a payment through their total and permanent disability insurance programme.

In other words, the name "total and permanent disability insurance" can be a little bit misleading. A permanent disability isn't enough to make you eligible to collect on your policy -- if you can still work, your policy might not pay out to help you meet your increased expenses (a case where trauma cover can come in handy while you recover). As with any type of insurance policy it's important that you know exactly what is and isn't covered. Never make assumptions or you could be the one left holding the bag (one filled with piles of bills you can't afford to pay). Don't risk thinking you were protected from sudden increased costs only to find out too late that you really weren't.

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