Attwood Marshall Lawyers Legal Practice Director Jeff Garrett joins Robyn Hyland on Radio 4CRB to discuss the benefits available to almost everyone through their superannuation if a person suffers an injury or illness that impacts their ability to work.
TPD (Total and Permanent Disablement) Insurance and your superannuation
Anyone who is employed will have a superannuation fund. Although people generally understand the balance of funds they hold in their superannuation, many people need to pay attention to the insurance policies that are automatically attached.
The types of insurance that may cover you under a superannuation account include Total and Permanent Disablement (TPD) cover, death benefits/life insurance. For some policies, salary continuance insurance, also referred to as income protection may also be attached.
TPD insurance provides necessary funds if someone suffers any permanent injury or illness that prevents them from returning to work. These funds can be paid as a lump sum, ongoing payments, or annual instalments, depending on the policy.
It all comes down to the finer details of the policy.
Most people believe that if they can still walk, talk, and breathe, they would not be eligible to make a TPD claim. However, this is not the case because a TPD claim relates to your ability to return to work and if you meet the total and permanent disablement definition within your policy.
TPD benefits are not limited to work-related injuries
The common misapprehension is that TPD benefits are only accessible if you are injured at work. These benefits are separate from workers’ compensation which can be claimed when you suffer an injury during your work.
Workers’ compensation helps rehabilitate workers to get back to work as soon as possible and compensate them for their time away from work. Workers’ compensation is an insurance policy employers pay to protect their workers.
By contrast, TPD benefits compensate you when you have suffered such a significant injury or illness that you can no longer work. If you suffer a catastrophic injury at work that results in total and permanent disablement, you may be entitled to claim workers’ compensation and TPD benefits.
There are many medical conditions, illnesses, or injuries that people suffer from that can impact their ability to work, including respiratory diseases, autoimmune diseases such as rheumatoid arthritis, and the aftereffects of having a stroke, to name a few.
Understanding your TPD Cover
It is essential to take the time to understand the insurance policies attached to your superannuation.
The main issues to focus on are the definitions within the policy, the amount you are covered for, and any requirements you need to meet for your cover to be valid.
Each insurer has a different definition of what it means to be “totally and permanently disabled”.
There are two standard definitions referred to in most policies. The words “any occupation” or “own occupation” are essential to recognise.
Most TPD policies held within the superannuation environment usually adopt the “any” occupation definition, which means you will only be eligible to claim these benefits if you cannot return to “any occupation” following an injury or illness. However, some people may hold policies outside of superannuation that allows you to claim if you cannot return to your “own” occupation after suffering an injury or illness.
A standard “any” occupation definition usually applies when a member has been absent from employment for six consecutive months because of illness or injury and is so disabled at the start of those three months and continuously since that time that the insured member is unlikely to ever engage in ANY reasonably suitable occupation.
Some policies also have an “at work” requirement in that they will only cover a person if they work a minimum set of hours each week – the standard is usually around 15 hours per week.
It is essential to review the amount you are covered for under your TPD insurance policy and ensure this is appropriate to meet your financial needs should you be put in a position to rely on these funds.
We often see clients make a TPD claim, only to learn when claiming that their cover only pays out, for example, $10,000.
If you are injured or suffer an illness and have a long life still ahead of you, as you can imagine $10,000 isn’t going to help too much with meeting financial commitments for the years to come.
Then there are other cases where people have several superannuation funds and can claim on multiple TPD policies, giving greater access to more funds.
Most TPD policies are lump sum, in that the individual is covered for a set amount. There is one exception, the Australian Retirement Trust, that depending on the date of disablement, will pay out the sum in instalments. The client must continually meet the definition of disablement every year when reviewed by the insurer.
When your benefits end
Most TPD policies end once an individual hits a certain age. Usually, that is around 55-60 years of age, depending on the policy. However, some may be terminated earlier.
How long does a TPD claim take to be paid out?
The amount of time it may take from application to pay out will depend on the member’s type of claim and prognosis.
TPD claims can take considerable time for an insurer to assess, mainly if the individual requires continual treatment or pending surgery.
Usually, a TPD claim is expected to take anywhere from 6-12 months to resolve, or longer if the claim is denied and needs to be litigated or the insurer’s decision needs to be challenged.
Making a TPD claim
To get a TPD claim underway, an individual needs to complete the following:
- A claim form provided by the insurer
- 2 x medical attendant’s statements (completed by the required medical professionals)
- Proof of identity
- Employment and education history
- Financial records
- Supporting medical reports and any other relevant records
It is crucial to get your application right the first time! Missing vital information or not completing the forms and statements correctly, will likely delay your claim or see it declined by the insurer.
It can help to obtain advice from an experienced TPD lawyer early on who can help ensure the application is completed correctly and all the supporting evidence is attached.
It is also essential for anyone accessing these types of lump sum benefits to obtain taxation and financial advice. This is always recommended when someone is withdrawing from their super in case there are implications to government benefits or child support assessments that need to be flagged.
Terminal Illness Cover – How is this different to a TPD claim?
Usually, death benefits (otherwise referred to as life insurance) are not necessarily something that benefits the member but are paid to the member’s dependents or beneficiaries after they have passed away. However, if someone has been diagnosed with a terminal illness, they may be able to access these funds early to assist with treatment options or live a more comfortable life for their remaining months or years.
To be eligible to claim a terminal illness payment, you must:
- Have active life insurance cover, whether it is attached to a superannuation fund or held directly with an insurer
- Have two doctors, usually a GP and a specialist, certify that the patient has a limited prognosis of 24 months or less to live. (Whilst most policies contain the 24-month prognosis rule, some insurers have decreased this to 12 months.)
- It is important to note that the definition of terminally ill differ between insurers.
Most life insurance policies end once an individual reaches a certain age – usually 70 years of age. However, each policy is different and some may stipulate an earlier age.
If an insurer accepts a terminal illness claim, it is crucial to understand that the person’s estate will not be eligible to claim death benefits upon that person’s death.
Individuals may have multiple claims if multiple policies are held through various super funds. For example, this can often be the case when people have moved between jobs and have yet to consolidate their super.
How long does a terminal illness claim take to be paid out?
Given the nature of terminal illness claims, insurers will prioritise the assessment of these claims and try to process a pay out as soon as possible. It will depend on how quickly you can gather the necessary medical reports to support the application and ensure everything is submitted as required.
Attwood Marshall Lawyers – helping people with compensation claims for over 75 years
Just as you revise general insurance policies, such as your car insurance or contents insurance each year when the renewal appears in your inbox, it is just as important, if not more important, to regularly check your superannuation insurance policies to ensure they provide adequate protection if something unexpected happens and you need to rely on such benefits.
If you believe you are eligible to make a TPD claim or terminal illness claim, it is important to get trusted advice from a TPD lawyer early on to help mitigate the risk of the claim being mucked up or denied because the application failed to include the correct information, or the medical reports presented failed to satisfy the conditions in the policy.
Many brokers or accountants offer to complete these types of applications on behalf of their clients, assuming it is simple paperwork. However, it can get very technical, and there are great benefits to having a TPD lawyer support you in making your application and ensuring you gain access to all your benefits.
Attwood Marshall Lawyers have a dedicated team who exclusively handle TPD claims.
We understand that when someone is at a stage in their life where they are applying for TPD or terminal illness benefits, they have experienced significant turmoil and life changes. Therefore, we aim to ensure that all our clients gain access to their full entitlements as quickly as possible to be financially secure and focus on their health and their family.
If you need assistance with a superannuation claim, TPD claim or terminal illness claim, please get in touch with our Compensation Law Department on 1800 621 071 any time.