A Total and Permanent Disability (TPD) claim is generally a lump-sum payment made to you if, due to illness or injury, you are unlikely to ever return to your previous job or any other appropriate work due to your injuries or illnesses. Each policy has different requirements for making a claim and it is therefore crucial to review your policy documents so that you understand exactly what is required. Some policies have more generous definitions that what is mentioned above and some have more stringent definitions, this will be discussed in more detail further on.
What Is Total And Permanent Disability Insurance?
Total and Permanent Disability Insurance is there to assist you in the event that you suffer a life altering illness or injury. In conjunction with income protection insurance, Total and Permanent Disability insurance is designed to ensure that you can continue to maintain your standard of living and cover the cost of expensive treatment and care. It is there to allow you to make changes in your life so that you can adjust to your new circumstances
Total & Permanent Disability Insurance benefits are paid as a lump sum and you are generally free to use the proceeds for anything you desire.
Do I Have Or Need TPD Insurance?
You may well have Total and Permanent Disability insurance through your super fund, your employer or via your financial adviser. It is important to speak with these parties to determine whether you do have cover.
In order to understand whether you may need TPD insurance, ask yourself the following questions:
- If you could not return to work due to illness or injury, would you have sufficient funds to support yourself and your family?
- Do you owe money on your house, credit cards, or personal loans?
- Do you have any family members who rely on you? You should consider their long-term requirements, such as education costs.
- Do you have parents who are financially reliant on you? We often ignore our responsibilities to assist in the care of our aging parents.
- Are you in a relationship and doing paid employment at the same time? If you and your spouse need two salaries to keep up with mortgage payments and your current lifestyle, you should have enough insurance coverage.
- Do you have any loose ends, such as money owing to relatives or friends, that you need to tie up?
How Do I Get TPD Insurance?
The majority of Australians have their TPD Insurance provided by their super fund. While there are advantages to this, it is important to know that superior products may well be available to you through a financial adviser. There are many different features within TPD Insurance which can make a meaningful difference to you in the event of a claim and it is therefore important to seek advice on the most suitable product for your needs.
How Does A TPD Claim Work?
While all TPD policies are different, there are some key elements of the process that are consistent throughout the majority of products.
The insurer will generally want to see that you have been off work for at least 3-6 monrhs before considering a TPD claim. The reason for this is that it is encumbent on you to comply with the treatment of your treating doctor. If you are not under the care of a doctor or not following your treating doctor’s treatment plan, it is unlikely you will be able to lodge a claim.
Once you have met this requirement, the insurer will need to assess you against the definition of disability that is attached to your policy. This will require you to have your treating doctors complete forms that describe your capacity to work as well as the likelihood of you being able to return to work. The insurer may well request evidence of your work history (CV) in order to determine what work you are suited to for the purpose of this assessment.
Am I Eligible To Make A TPD Claim?
There are a number of different types of TPD insurance and each type has different requirements to lodge a claim. The most common types are as follows:
Any Occupation – This definition typically requires you to be unlikely to return to work in Any Occupation for which you are sutied by way of education, training or experience. The insurer can often require you to undergo a small degree of retraining to help you find work again should it be reasonable.
Own Occupation – This definition typically requires you to be unlikely to ever return to work in the occupation you were in immediately prior to becoming ill or injured. This definition is the most comprehensive in the market and provides the insurer with little leeway to assess whether other work you are suited to will be available given your circumstances.
Home Duties/Non-Working – This definition typically requires you to be unlikely to ever again perform certain activities of daily living such as cooking, cleaning, bathing, shopping etc. This definition is the hardest to claim on and is most common with those who are unemployed or working in high risk occupations.
How Much Is The TPD Benefit When Making A Claim?
The size of your TPD claim will be tied to the level of cover you had when you stopped work due to illness or injury. This amount will be specified in your renewal notices, your super statement, or information provided by HR at work.
If your total and permanent disability claim gets approved, you will receive a lump sum. Once all the information is gathered, your provider can give you a clearer picture of your TPD payout. If your TPD insurance is funded through superannuation, it is likely you will need to pay tax on the benefit you receive.
What Does A Successful TPD Claim Include?
To submit a successful claim, you’ll need to contact your insurance provider and complete the initial claim forms.
The key to submitting a successful TPD claim is understanding precisely what the insurer is seeking to determine based on the terms and conditions of your specific policy. Understanding this will allow you to provide them with all required information in the most efficient manner possible without prejudcing yourself.
However, because most people have never filed a TPD claim before, they find the process overwhelming with numerous forms to complete and hoops to jump through. Engaging an expert adviser to represent you will ensure that you have a strong advocate and a professional to assist in streamlining the process for you wherever possible. If you are in a position where you are looking to claim on your TPD insurance, it is likely that you would rather be devoting energy to your recovery as opposed to spending significant amounts of time speaking to call centres at super funds and insurance companies.
What Information Do I Need To Provide?
If you want to file a claim, you’ll need to fill out the claim forms that the insurance provider demands. The claim forms typically comprise a statement that you fill out, a statement that your previous employer fills out, and one or two statements that your attending doctors fill out.
You may also need to demonstrate that you cannot be retrained for different employment. As previously said, each fund is unique, with various entitlements and restrictions or thresholds to meet.
Why Would A TPD Claim Be Denied?
The following are some of the most likely causes your TPD claim may be denied:
You do not meet the requirements of the TPD
Each TPD policy is unique, including the definition of TPD included in the policy and what you’re protected for. If your disability does not meet the criteria of a disability in your policy, your TPD claim may be denied.
Your policy is no longer in effect
If your policy is no longer active or has not been used for a long time and has lapsed, your income protection or TPD claim may be denied. If this occurs, there is a bit of legal remedy.
Your age has an impact on your claim
One of the most common reasons for a TPD claim being denied is that you are too old. Many policies require you to be under 65 to be covered.
You were not working when your cover started
Many policies require that you are ‘at work’ at the time of your cover starting. The criteria for this varies from policy to policy and it is important to understand whether you are covered as you think you are.
Omissions were made at the time of application
Failing to disclose various medical or financial matters at the time of applying for this cover may result in it being void in the event of a claim. It is important to be transparent with the insurer during the application process to ensure that there are no surprises in the event of a claim.
Understanding why your TPD claim was denied is the first step toward resolving this issue; from there, you can pursue a variety of options.
Engage An Expert
As you can see, TPD Insurance claims are far from simple. The policies are highly complex making it incredibly difficult for a regular consumer to understand what they are entitled to. Engaging an expert will take significant stress out of the process as you will only be called upon to provide information when absolutely necessary. Additionally, having someone represent you that has senior relationships with insurers may well provide you with the ability to escalate issues with your claim that you would not ordinarily be able to do. If your claim is not successful, we will not charge you a fee and this ensures that our interests are aligned in delivering you the outcome you deserve.
Should you wish to discuss your claim with one of our team, please click here or call us on 1300 665 356.