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Navigating the Challenges of TPD Claims: Payout denied on Centrelink carer’s allowance.

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Please note that this post was written for Victorian audiences and the information within may not apply to other regions.

In the realm of insurance claims, the determination of Total and Permanent Disablement (TPD) can be a complex and often contentious process. A recent case brought before the Australian Financial Complaints Authority (AFCA) sheds light on the intricacies surrounding one complainant’s quest for a $36,000 payment based on their TPD claim.

The TPD Dispute:

The complainant argued that their work as a carer, should be considered “gainful employment” as defined by the insurance policy as their duties as a carer were work that they carried out for reward or financial benefit. The employment arrangement with the person they were caring for consisted of specific domestic duties and worked between 30 to 40 hours a week. It is on this basis that the complainant claimed their employment was gainful as they received the reward or payment in the form of a carer’s payment from Centrelink.

They contended that their claimed condition of cardiomyopathy, rendered them unable to work, and that they had an employment arrangement with the person he was caring for.

The AFCA Verdict:

The AFCA (Australian Financial Complaints Authority) ruled against the complainant, asserting that the evidence did not support his claim. According to the ombudsman, the Centrelink carer’s allowance is granted to individuals restricted in maintaining employment due to caring responsibilities, rather than constituting gainful employment under the insurance policy.

Defining Gainful Employment Under TPD Claims:

The TPD policy under scrutiny defined gainful employment as working in any occupation or work for reward or financial benefit, whether on a permanent or temporary basis. The AFCA clarified that this definition implies a traditional employer-employee relationship, where payment is exchanged for services rendered.

The Insurers Stance:

The former insurer, who declined the claim, and the former trustee, who reviewed and supported the decision, were not identified in the AFCA ruling. Zurich, which assumed liability from the previous insurer, concurred with the initial decision, asserting that the complainant’s carer’s benefit did not meet the criteria for gainful employment.

Premium Refund and Interest:

The complainant, seeking not only the TPD benefit but also a refund of premiums and interest, argued that his claim was unjustly delayed for eight months. However, AFCA ruled against a premium refund, noting that the complainant had insurance cover for more severe disabilities under the policy’s alternate TPD definitions during the premium payment period.

This case serves as a reminder of the complexities involved in TPD claims, where the definition of gainful employment and the interpretation of policy language play pivotal roles. As individuals navigate the nuances of insurance claims, understanding the policy’s terms and conditions becomes crucial in ensuring a fair and accurate assessment of their claims.

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