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Understanding TPD insurance through superannuation

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We’re all familiar with the superannuation system in Australia. If you’re 18 or older and working, your employer is required to pay superannuation contributions into your super account.*

While originally set up to ensure Australians have an income stream after they retire, the scheme does actually allow you to access your funds in instances other than retirement. For example, if you’re unable to work due to injury or illness you can withdraw your superannuation early.

In most cases this is unnecessary if you have certain superannuation insurance policies like Total and Permanent Disability insurance.

What is TPD insurance? What does TPD insurance cover? What does it mean to be totally and permanently disabled? How do I make a superannuation TPD claim? We’ve got the answers.

What is TPD insurance?

TPD insurance pays a lump sum if you’re sick or injured and unable to work in the foreseeable future

Total and Permanent Disability insurance is a resource made available to people who are injured or ill to the point they can’t continue working.

If you make a superannuation TPD insurance claim, it pays a lump sum benefit that is designed to provide you and your family a certain level of financial security, as well as help you with medical and rehabilitation costs.

It’s one of many superannuation insurances you might have. Others may include death benefits or income protection.

How do I know if I have TPD insurance?

Some super funds automatically provide you with TPD insurance

Like income protection, it’s common for people to insure themselves against TPD insurance through their superannuation fund in conjunction with a life insurance or disability insurance policy.

You can buy TPD insurance manually, but in most cases, it may already be part of your super funds’ default level of cover (which is generally also cheaper).

To be eligible to make a TPD insurance claim your policy simply needs to be in force either at the date you were last able to work, or the date of your injury or illness.

Note: TPD insurance isn’t a feature that’s available in every super fund, so be sure to check. Also, note that the law allows super funds to cancel insurance on inactive super accounts that haven’t received contributions for at least 16 months.

How does TPD insurance work? What does TPD insurance cover?

A successful TPD insurance claim doesn’t rely on anyone being at fault

The good thing about TPD insurance is that you can make a TPD claim for any injury, illness or medical condition, whether it be cancer, chronic pain, mental illness, degenerative diseases – as long as you have the appropriate cover.

And unlike specific compensation schemes like WorkCover, CTP, or TAC, TPD insurance covers you regardless of how the injury or illness came about, or whose fault it was.

The other benefit is that the law around superannuation insurance is federal, meaning the super fund’s criteria don’t differ state to state.

What does “total and permanent disability” mean?

Each superannuation fund has its own definition of total and permanent disablement

To be eligible to make a TPD claim, you’ll generally need to have been injured or suffering an illness and unable to work continuously for a minimum of three to six months because of an injury or illness.

The definition of what it means to be totally and permanently disabled, however, differs for each fund – but often in one of two ways:

  • Own Occupation – meaning you’re unable to perform your specific job. E.g., due to a paralysed hand, you can’t operate as a surgeon
  • Any Occupation – meaning you’re unable to perform any job in line with your experience, education and training. E.g., due to a traumatic brain injury, you can’t only not perform as a surgeon, but in the medical field at all.

It’s important to understand the distinction between these two levels of cover because if the insurer can successfully argue that you can theoretically still work within your general field, they can deny your claim.

Do I need a lawyer for a TPD claim?

The benefits of using a lawyer for your TPD claim outweigh the challenges

As mentioned in this blog, super funds have certain criteria you need to satisfy to be eligible to claim on your TPD insurance – including the varying definitions of total and permanent disablement. The list of criteria can be difficult to establish, and the paperwork can be overwhelming and time consuming.

You also need to be prepared for a TPD claim rejection. According to the Australian Securities and Investments Commission, more TPD claims are denied than any other type of superannuation insurance claim.

In fact, an Australian Prudential Regulation Authority report found that 82 per cent of rejected claims were because the contractual definition of “total and permanent disablement” wasn’t satisfied. (It’s important to note that this doesn’t necessarily mean the claims weren’t viable, but rather not enough evidence was provided).

A TPD superannuation lawyer will do all the work for you which makes it less intimidating and faster. Not only this, but Zaparas Lawyers superannuation claim experts will advise you from the beginning whether your claim is viable, which will save you time and have your claim paid out quicker.

Read more about the importance of having a lawyer for a superannuation insurance claim here.

*New legislation has been introduced to remove the previous $450/month threshold, effective July 1, 2022.

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If you are from Queensland you can learn more on our Queensland Superannuation Page