What if you can't work due to an illness or injury? Let's look at your TPD insurance

Not being able to work because of an illness or injury can cause serious mental and financial strain, especially if it's permanent. But did you know that you may be entitled to a lump-sum payment through total and permanent disability (TPD) insurance provided by your super fund?

Superannuation is something many of us don't think about much until retirement approaches. But super is far more than a nest egg. If you’re forced out of work because of an illness or injury, you may be covered by an insurance policy that many Australians don’t even know exists. 

What is TPD?

Total and permanent disability (TPD) is a legal term used in life insurance policies that refers to any illness or injury that prevents a person from working. To protect you from the financial burden, Australian law requires that most super funds bundle TPD insurance with your superannuation plan.

As such, the majority of Australian workers are covered by TPD insurance through their super without even realising it.

What is considered a total and permanent disability?

Your injury or illness does not have to be work-related. You could be injured after a car accident or have a herniated disc, you could have a mental illness such as anxiety, depression or schizophrenia, or you could have been diagnosed with cancer. If it stops you from being able to work your usual job, you might have a claim.

Who is eligible to receive TPD insurance benefits?

While superannuation insurance policies vary, most contain three common elements when it comes to defining who is entitled to receive total and permanent disability benefits. You’re likely to qualify for a lump-sum TPD insurance benefit if: 

1.  You’re unable to continue in your usual occupation due to injury or illness.
2.  You’re absent from your usual occupation for a continuous period, also known as a waiting period*.
3.  At the end of the waiting period, the insurer must be satisfied that you’re unlikely ever to return to any regular work within your education, training and experience.

*The length of the waiting period can vary from policy to policy, but it typically ranges from three to six months.

Things to consider when making a TDP insurance claim

As is typical with insurance, there are often confusing conditions and clauses that can leave you scratching your head. Choosing the right super fund is largely based on your personal circumstances, but there are some variables to look out for when researching the fund’s TPD insurance arrangements:

• Age: Your age can affect the amount you receive as a benefit and determines whether you’re entitled to make a TPD insurance claim in the first place.
• Active employment: Most policies state that to be eligible you must be in ‘active employment’ when you first join the superannuation fund. This usually means you must work, or be capable of working, at least 30 to 35 hours per week. But keep an eye out, as this requirement can vary between policies.
• Pre-existing conditions: While most policies attached to your super fund will still cover you for TPD insurance if you suffer from a pre-existing illness or injury, some won’t.
• Ability to work: When insurers assess whether or not you’re able to return to work, some will have a more flexible idea of what realistic employment options you have and some may even take into account any retraining you have done or could do. This in turn makes it harder to have a claim accepted.
• Multiple policies: If you’re a member of more than one super fund with TPD insurance, you might be entitled to claim benefits from all of them. However, many insurers are now adding clauses to prevent you from claiming against multiple policies.
  

Common misconceptions about claiming TPD insurance

I am claiming WorkCover, income protection and/or other benefits, so I am ineligible: 
Most of the time, TPD benefits can be claimed on top of WorkCover payments, income protection, trauma insurance and other benefits.

I have a pre-existing illness or injury, so I am unable to claim: 
You might still be covered by TPD insurance if you had a pre-existing illness or injury. In these situations it's best to seek legal advice to fully understand your options and entitlements.

I am making super contributions, so I am covered by TPD insurance: 
The fact that you make super contributions does not guarantee you’re covered by the fund’s TPD policy – you must still meet the specified criteria. If you’re not sure what your super fund’s TPD policy is, you can call us and we can run a free super claim check for you and let you know.

The importance of seeking legal advice before making a TPD claim

It’s vital you seek legal advice before making a TPD claim. When it comes to insurance claims, what you say to the fund’s insurer can and will be investigated during the process.

By contacting us from the start, you ensure your claim will have the best possible chance of returning the maximum entitlement. 

Read more about making a total and permanent disability insurance claim.