A Significant Shift
Over the past decade, Total and Permanent Disability (TPD) claims in Australia have undergone a profound shift. Where once the majority of claims were linked to physical injuries and chronic illnesses, today mental health conditions are among the leading drivers of TPD payouts. This change reflects both the increasing prevalence of severe psychological conditions and a welcome reduction in the stigma around seeking support.
This is an important and telling step for our society. It means people struggling with depression, anxiety, trauma and other mental illnesses are no longer invisible or ignored. The TPD framework is doing its job: providing financial relief when individuals can no longer maintain employment due to health challenges.
Why Premiums Are Rising
As more Australians access TPD benefits for mental health conditions, insurers are paying out a higher volume of claims. These benefits are significant, often providing lump-sum payments designed to support long-term needs. While this financial support is essential, it also increases the overall cost to insurers, who must balance claims’ payments with the premiums they collect.
Insurance operates as a pool: when claims rise in one area, the costs are shared across all policyholders. For TPD, the surge in mental health-related claims means insurers have had to adjust premiums upward to ensure they can continue meeting their obligations. On average, TPD premiums are now substantially higher than they were five or ten years ago, and industry analysts expect this trend to continue in the near term.
This doesn’t mean insurers are discouraging claims. On the contrary: the system is working as intended. Rising premiums simply reflect the reality that more people are relying on the cover, particularly for conditions that may not have been claimed so openly in the past.
What This Means for You
If you’ve noticed your premiums rising, you’re not alone. The increases are not about individual claims or about penalising anyone who has sought support. They reflect a broader trend: more Australians are making claims, particularly for mental health, and insurers are adjusting to keep the system viable.
If you’ve taken out TPD cover as a crucial safeguard for yourself, you should be aware of the changes affecting your premiums. None of us can predict the future, and conditions that affect our ability to work (whether physical or psychological) can arise suddenly. Having the right cover in place means financial stability at a time when it matters most.
Looking Ahead
The rise in mental health claims is both a challenge and an opportunity. It highlights the vital role of TPD insurance in supporting Australians through some of life’s most difficult circumstances. At the same time, it underscores the need for ongoing industry innovation, regulatory oversight and community awareness around mental health.
Ultimately, while premiums may be rising, the value of TPD insurance has never been clearer. It exists to provide peace of mind, security and dignity when health prevents work, and that mission continues stronger than ever.
HPH Life Insurance
As your advisers, our commitment is to keep you informed about these industry changes, help you review your cover and ensure your policy meets your needs.
Feel free to reach out to our risk specialists for a review of your cover.
Jade Burford: jade@hphlife.com.au; 0403 757 104
Shane Reay: shane@hphlife.com.au; 0478 597 011
Important Disclaimer
The information in this article is general advice only and does not take into account your personal objectives, financial situation, or needs. Before acting on any information provided, you should consider whether it is appropriate to your circumstances and, where applicable, seek personal financial advice tailored to your situation. You should also ensure you read the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) prior to making any decision about a financial product.