What is Total and Permanent Disability Superannuation (TPD)?

The definition of ‘total and permanent disability’ (TPD) is inconsistent across the insurance industry. In insurance terms, TPD is defined by your personal circumstances and the type of insurance policy you have in place. Insurance companies differ in their interpretations of what they consider ‘total and permanent disablement’, therefore it is essential that you obtain a clear understanding of your policy. As with any insurance policy, it pays to read the small print as it will clearly define the parameters of your cover. TPD insurance provides a lump sum payout in the event that you become permanently disabled due to illness or injury that leaves you unable to work again.

Total and permanent disability is when:

• Due to illness or injury, you are unable to work in your usual occupation.
• Due to illness or injury, you are unable to work in any occupation.

• In case, you are considered to be unable to accumulate superannuation in the future.

Generally speaking, TPD affects your ability to work and socialise, and also greatly impacts your ability to conduct activities of daily living.

TPD cover is obtained either through your superannuation fund or as separate insurance cover. Default TPD cover is cover that is applied by ‘default’ upon joining your super fund and yields a significantly lower payout than other independent policies. Default cover can be as low as $80,000 and up to $400,000. Most separate funds provide TPD cover of approximately $3-$5 million for individuals between the ages of 15 and 70 years old.

* As per ‘SuperGuide’, Australia’s leading provider of information on superannuation and retirement planning, Super funds only offer “any occupation” TPD cover, as opposed to “own occupation” cover.1

How Do You Know If You Are Eligible to Claim TPD?

To be eligible to claim TPD, you must meet the definition of what is considered to be ‘permanently incapacitated’ as per the Superannuation Industry (Revision) Regulations and meet other eligibility clauses as detailed in your policy.

If you suffer from an illness or injury that leaves you totally and permanently disabled, you may be able to claim on the policy purchased as part of your superannuation policy or other life insurance policy. If you have a permanent disability, a lump sum payout can provide you, and your family, peace of mind. A TPD payout is often used to pay everyday living expenses as well as, medical costs and debts such as your mortgage. It would also help to establish a new lifestyle that better suits your physical and medical requirements. Receiving a lump sum payout through your superannuation when you are incapacitated can provide an incredible amount of comfort, and you may be able to claim more than once if you have multiple policies.

Do I Need a Lawyer?

Insurances policies are notoriously difficult to understand, exclusions and eligibility clauses in a policy’s fine print are often the reason that claims are denied. A lawyer will help you to understand the conditions of your policy, ascertain what you are entitled to and will navigate the complexities of filing a claim on your behalf. You may be entitled to a TPD lump sum payment through your superannuation, and a lawyer will assist you in making additional claims through other insurance policies.

If you or a family member is permanently incapacitated, it is essential that you obtain professional legal advice. An empathetic lawyer understands the impact that disability has on every facet of an individuals life. A legal professional will understand how TPD claims ultimately provide vital financial security and the means to build a life that supports your future financial and everyday needs.

References

1. Vanem, L. (2019). TPD insurance through super: A Definitive Guide. Retrieved 1 October 2019, from https://www.superguide.com.au/accessing-superannuation/how-long-does-tpd-approval-take

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