Attwood Marshall Lawyers Partner and QLD Law Society Accredited Specialist in Personal Injury Law, Jeremy Roche, discusses lump sum TPD Claims for those who cannot work due to a physical or psychological injury, illness or medical condition.
What is a Total and Permanent Disability (TPD) claim?
Total and Permanent Disability claims are often referred to as “TPD claims”.
TPD claims are available to individuals who are unable to return to work due to an injury, illness or condition, and hold a TPD policy through their superannuation fund or directly with an insurer. TPD policies cover you for a specified lump sum payment in the event that you become totally and permanently disabled because of an injury or illness that prevents you from returning to work.
Many people are unaware that they even have access to TPD insurance! This is because workers are often automatically provided with TPD insurance when they join a superannuation fund (as opposed to organising their own TPD cover). Super funds vary but most funds include some form of automatic lump sum TPD insurance for its members. In many instances, an injured or unwell worker can claim for more than one TPD payout because they have multiple policies or superannuation accounts.
Each insurer’s definition varies on what it means to be “totally and permanently disabled”. The specific policy definition must be met in order to receive the TPD funds.
Sometimes, the policy requires you to be medically unable to work in the job you were working in before the disability on a permanent basis. This is referred to as an “own occupation” policy.
Other times, the policy requires you to be unable to work in any job that is suited to your education, training or experience on a permanent basis. This is referred to as an “any occupation” policy and is a harder definition to satisfy.
If you are able to prove to the insurer or fund (with medical evidence and submissions) that you meet the required definition for the release of funds, your TPD claim will be successful.
Most TPD payments are made as a once-off lump sum to the TPD claimant. Some policies, however, involve payments of annual instalments (rather than a single lump sum) which are paid each year if you are able to continue proving over time that you are unable to work.
Please note that the funds paid out for a successful TPD claim do not come from the money saved up in your superannuation account (i.e. from employer contributions and similar). The TPD funds are paid from a separate policy of TPD cover (rather than coming from your own superannuation funds). When the TPD claim is paid out, the funds are paid into your superannuation account and are added to the funds already sitting in your account. These funds, together, are available although there can be significant tax implications if you withdraw any funds. We recommend you obtain advice from a qualified financial advisor before making any decisions in this regard.
How much is my TPD claim worth?
The amount that your TPD claim is worth will depend on the specific monetary figure noted in your TPD policy. Some policies are worth tens of thousands, others are worth hundreds of thousands, and some are worth over a million dollars. If you want, you can change your TPD coverage to increase how much you can claim in the event that an injury, illness or condition stops you from being able to return to work.
If you do not know how much TPD cover you have, you can contact your superannuation fund or insurer directly to find out. Alternatively, we are able to confirm this with your superannuation or insurance provider prior to lodging a claim.
It is important to review your TPD cover to ensure you will be able to cover your expenses in the event you need to make a claim of this type. You should consider how much money you need to pay your ongoing living expenses, costs such as mortgages or credit cards, medical and rehabilitation costs, and the cost of supporting yourself through retirement. We recommend that you obtain appropriate advice from a qualified financial advisor and/or insurance broker.
Read more: When was the last time you reviewed your superannuation insurance policies?
Am I eligible to make a TPD claim?
To make a TPD claim, you must:
- Have held TPD insurance cover at the time you became disabled;
- Demonstrate that you are suffering from an illness or injury that prevents you from being able to return to work.
It is a common misconception that to be eligible to make a TPD claim you must have suffered your injury or illness in the course of your work. This is not the case. For example, if you have suffered from a stroke that puts you out of work, you may be able to make a TPD claim. The cause of your injury, illness or condition is irrelevant.
Nonetheless, it is often the case that someone making a WorkCover, motor vehicle or public liability compensation claim also has access to a TPD claim. The claims can be made concurrently and do not affect each other.
What should I be aware of?
Each policy is different.
The most important things to check with your TPD insurance cover are:
- The amount for which you are insured (i.e. whether it is sufficient for your needs);
- The terms of your policy (i.e., what is the relevant definition you must meet to succeed with the claim);
- Whether you are entitled to claim a single lump sum, or annual instalments (with a requirement to prove continuing incapacity for work each year);
- Whether there are applicable waiting periods or cut-off dates (TPD insurance in super will often cease at age 70, and in some cases earlier);
- What the rules are around your cover being potentially extinguished (e.g. whether there is a minimum account balance or contribution required to maintain your coverage, etc.).
- Whether there is a “minimum working hour” requirement (i.e. whether you can only claim if you were working a specified number of hours at the date of your disablement.
It is important to review your policies and make sure you have a complete understanding about what you are covered for and more importantly what you are not covered for, in the event that the unexpected happens.
How do I make a TPD Claim?
Step 1: Contact Attwood Marshall Lawyers. We will ask you to sign an authority that allows us to complete an ATO super search to identify any possible policies that you may have available to you. It is often the case that people have more than one policy available and can claim more than one TPD payout from different funds.
Step 2: We will request your insurance policy and claim documentation from your superannuation fund or insurer. We will help you complete all documentation and draft submissions on your behalf to ensure optimal chances of success with your claim.
Step 3: Your GP and treatment providers will provide medical reports and evidence that we will submit to the insurer to confirm that you qualify to claim the TPD sum. The medical evidence needs to demonstrate that you are medically unable to work and that you meet the specific definition of total and permanent disablement according to your TPD policy.
Step 4: The fund/insurer will make a determination about your claim.
Importantly, people often state that you can make your own TPD claim, which is true. Further, accountants and financial advisors often inform their clients that they can make the TPD claim on their clients’ behalf, which is also true.
The decision whether to use expert TPD lawyers to assist with your TPD claim depends on how much you want your claim to have the best chances of success at the earliest opportunity.
As expert TPD lawyers, we are regularly contacted by people who have put in their own claim (or had others do so on their behalf), only for their claim to have been rejected by the insurer at first instance. Many of those have been told by their financial advisors to put their own claim in (without lawyers) to see how it goes, with a view to engaging lawyers only if the claim is rejected.
The problem with this approach is that it is often much more difficult to succeed with a claim that has been rejected at first instance – particularly where the claimant (and/or their advisor) has already lodged submissions or medical evidence that is detrimental to the claim. Once lawyers become involved, it can be difficult to erase mistakes that have already been made. This can lead to extra complications, additional (and costly) evidence, and unnecessary delay. Depending on what problems may exist, the insurer may then tie the claim up in protracted litigation that otherwise could have been avoided.
What happens if my TPD claim is rejected?
If your claim is rejected from the outset, you should raise an internal appeal with the insurer or superannuation fund’s internal complaints team. To do this, we submit new evidence and submissions to the insurer/fund to prove to them that they did not make the correct decision. Often, we are successful with having the initial decision overturned.
If the insurer continues to reject the claim, your next avenue involves submitting your case to the Australian Financial Complaints Authority (AFCA). AFCA will investigate independently, liaise with both sides, and come to a decision.
It is important to note that time limitations apply for AFCA to be able to review your claim. If your claim is declined, please ensure you seek legal advice as a matter of urgency. Usually, you have 2 years from when the decision is made to lodge a complaint, although this can be extended in certain circumstances.
If AFCA also rejects the claim, you can take your TPD claim to court and have a determination made by a judge. However, it is rare for a matter to be taken this far.
How long do TPD claims generally take?
TPD claims usually take anywhere from 6-18 months for a final decision to be made. In some cases, the payment is made almost straight away (e.g. 1-3 months).
Are there any time limits for TPD claims?
The majority of TPD claims can be made at any time. Some policies will restrict the time limit when you must make a claim (e.g. within 4 years of becoming disabled).
If you make a claim and it is declined, strict time limits apply in appealing the decision. If your claim was declined by the insurer or superannuation fund, you have two years from that date to be appeal the decision to AFCA or you will be prevented from doing so.
Frequently, people will submit their own TPD claim only to have it rejected at first instance. Not realising that strict time limits apply following that rejection, they often decide to ignore the decision for now and put their entire TPD claim on the backburner – often to a point where it becomes too late to do anything about it.
Each policy will have its own specific wording and terms around time limitations that apply. It is important to ensure you fully understand your policy. If you need help interpreting the definitions within your policy, you can call our team at any time.
What about Income Protection Insurance?
Many people also have income protection insurance in addition to TPD cover. If you hold income protection insurance in your super (or through an external insurance policy), you may be able to claim weekly income payments to help you get by. Usually, an income protection policy involves a claim for access to 75% of your usual income to be paid for a specified period (often for 2 years, or in some cases until retirement age). You can change your income protection insurance to ensure that you are appropriately covered when you need it. Often a waiting period applies before the first payment will be made.
Attwood Marshall Lawyers can help
Our firm’s intent is to help people and change their lives for the better. We are community focussed, empathetic and determined to help you wherever we can.
If you can no longer work because of an injury, illness or condition, we want to help you get things back on track and achieve financial security as soon as possible.
For a free, no-obligation initial consultation, contact our Compensation Law Department on 1800 621 071 at any time.
More Compensation Law articles:
Read more: ‘Tis the season to review your life insurance policies and be prepared for the holidays
Read more: Watch out for TPD Definitions
Read more: Can insurers use your social media posts as evidence in a TPD claim?
