TPD stands for Total and Permanent Disability. TPD insurance pays a lump-sum if you become totally and permanently disabled due to illness or injury.
TPD insurance policies are often taken out by your Superannuation provider on your behalf. It can also be taken out privately by you.
How do I know if I have TPD Insurance?
If you are unsure of whether you hold TPD insurance, it is best to check your Superannuation Annual Statement, or contact your Super company or private insurer directly. Many individuals are unaware that they hold TPD insurance through their Superannuation account.
What if I do not have TPD insurance?
If you do not have TPD insurance, you will be unable to make a claim for TPD.
Am I eligible to claim my TPD Benefit?
If you have suffered an injury or illness which has caused you to permanently cease work, you may be eligible to claim your TPD Benefit. Please note, the injury or illness does not need to be work related.
Each claim is assessed against the specific policy relating to your insurance coverage. We most commonly see two types of policies –
- Own occupation
- Any occupation
Own occupation
If you hold an “own occupation” policy, the insurer will assess whether it is likely that your illness or injury will permanently stop you from being able to work in the occupation that you were working in immediately prior to ceasing work.
Any occupation
If you hold an “any occupation” policy, the insurer looks more broadly at whether you will be permanently unable to work in any job for which you are reasonably suited by training, education and experience. This is the more common policy, and it is harder to satisfy as the insurer will look at your transferable skills, your ability to retrain and your ability to undertake sedentary administrative duties.
Be wary of exclusions and eligibility requirements related to your policy.
When can I make the claim?
It is best to notify the insurer or Super company as soon as possible. However, if it has been some time since you became permanently unable to work, you are likely still able to make a claim.
It is also important to note that many policies have a waiting period. You can notify your insurer of your intention to claim TPD insurance within this period, though they may not action the claim until the waiting period has ended.
What is the process of making a claim?
The exact process will vary depending on the fund/insurer’s requirements.
With the help of Arnold Dallas McPherson Injury Lawyers, typically, the following steps would occur:
- We write to the insurer, notifying them of your potential claim and requesting information and documents regarding the policy, level of coverage and process for making a claim.
- We gather the required documentation to support the claim.
- We request that at least one of your treating doctors complete a Medical Statement.
- We complete the claim forms.
- We lodge submissions, supporting documentation and claim forms with the insurance company so that claim assessment can commence.
Once the claim is lodged, the insurer may request further documents or medical information from you.
If the claim is successful, the insurer will write to you advising you that the claim will be paid.
If the insurer intends to reject the claim, they will send a letter advising you that they intend to deny the claim. You will then have the opportunity to respond to this letter and to their reasons.
Upon receipt of your response, the insurer will consider and make a final decision.
How long does a claim take?
TPD claims typically take between 3-6 months, although this may vary due to a number of factors.
Quite often, claims are delayed where insurers request further medical or financial information.
How much money will I receive if I have a successful claim?
You will be insured for a set, lump-sum amount. We see individuals covered for anywhere between $20,000 – $2,000,000.00. This often depends on age, income and occupation.
If you make a successful claim, you typically receive 100% of the amount you are covered for. If your TPD insurance is held through your Superannuation, the insurer will pay the TPD benefit amount into your super account. You will then have the option to withdraw the whole amount (and your super balance), withdraw a partial amount, roll-over into a new fund, or do nothing.
Will my TPD payment be taxed?
If your TPD payment is linked to your superannuation account, the insurer will pay the benefit into your super account. If you do not withdraw your insurance payout until retirement age, you will likely pay no tax on the benefit. If you decide to withdraw, there will be a portion of the benefit that is taxable, and a portion that is not taxable.
We recommend that all clients seek financial advice prior to making a withdrawal from their super account, so that you can better understand the tax implications.
Would a TPD payment affect Centrelink or WorkCover payments?
A lump-sum TPD payment will usually not affect any WorkCover entitlements you may have. On the other hand, if you are receiving Centrelink benefits, they may be affected by a TPD benefit, if the benefit is withdrawn from your superannuation account. This will depend on the type of Centrelink benefit you receive and the test that applies to you, e.g. income test or assets test.
We recommend seeking financial advice from a qualified Financial Advisor to better understand your options.
What do I do if the claim is denied?
You have the following options if your TPD claim is denied –
- Request an internal review with the insurer
- Refer the matter to the Australian Financial Complaints Authority (AFCA)
- Refer the matter to Court
Please note that there are strict time limits for a referral to AFCA, 2 years from the date of decision, and for Court, 6 years from the date of decision.
