Total and permanent disability (TPD) coverage is a type of insurance designed to provide financial protection to those who suffer from significant injury, illness or other disabilities which prevent them from working in their usual job or any other occupation for which they might be suited.
Understanding the types of TPD policies available and whether you are eligible to claim can be complex – TPD policies are known for dense and lengthy product disclosure statements! In this article we’ll help demystify TPD insurance, including making a claim. If you need further information on TPD, it’s advisable to contact experts in the area such as our professional team at ROC Legal.
The main types of TPD policies
TPD cover within superannuation: Many Australians hold TPD coverage with their superannuation funds as part of their member benefits. TPD cover within superannuation is often more affordable than standalone policies (see below) since premiums are deducted from the individual’s super balance. However, coverage and benefit amounts may vary depending on the terms of the superannuation trust and the individual’s membership arrangements.
Standalone TPD insurance: This type of policy is offered independently just like other insurance products, such as car or life insurance. It will provide coverage specifically for total and permanent disabilities, offering a lump sum payment to a claimant if they meet the policy’s definition of TPD.
There are also various types of TPD cover – some policies will cover the insured person if they are unable to perform any sort of work (known as ‘Any Occupation’ cover), while other policies might be ‘occupation-specific’ (‘Own Occupation’ cover).
Own occupation: This type of policy defines TPD as being unable to perform one’s own occupation because of illness, injury or disability, so while this coverage is preferable, for most people, it is also more expensive than ‘any occupation’ coverage because it is tailored to your work circumstances.
Any occupation: This policy covers someone who is unable to work in their usual occupation for at least six months, and is also unlikely to be ever able to work in any occupation for which one has suitable training, education and experience.
Challenges in making a TPD claim
A successful TPD claim will generally see the claimant paid a lump sum allowing them to live comfortably for their remaining years but insurers will require extensive evidence to prove the extent of the disability and that the claimant has met the other eligibility conditions under the policy – this is what makes many TPD claims challenging and lengthy. These challenges include:
- the requirement that the claimant prove their level of disability through extensive medical evidence;
- the existence of ‘wait times’ after a person sustains an injury before they are able to make a claim – this is so the insurer can see whether the injury stabilises and determine its full extent;
- ‘exclusions’ exist in most TPD policies, such as when a claimant has a pre-existing injury;
- requirement that the claimant is complying with ongoing medical care and rehabilitation for the injury;
- claimants will be required to extensively demonstrate their work history along with other background information – some policies will require that the claimant was working full-time in the year before they became disabled.
- some TPD policies may require proof that you have lost the capacity to perform several basic living tasks, such as washing yourself or going to the bathroom, before allowing a claim.
TPD policy exclusions and limitations
Most TPD policies will include terms which limit or exclude the ability to make a claim under the policy including:
- Pre-existing conditions: TPD policies may exclude coverage for pre-existing medical conditions, injuries or disabilities that existed before the policy’s commencement or during any specified waiting periods. However, some policies may provide coverage for pre-existing conditions under certain circumstances.
- Intentional self-inflicted injuries: TPD insurance typically excludes coverage for disabilities resulting from intentional self-inflicted injuries, suicide attempts, or participation in illegal activities.
- Exclusions for certain occupations or activities: Some TPD policies may contain exclusions for disabilities arising from specific occupations, hazardous activities, or high-risk hobbies. Individuals working in high-risk professions or engaging in dangerous activities should carefully review policy exclusions and consider supplemental coverage if necessary.
Other considerations and the importance of good legal advice
Navigating the TPD claims process can be complex, especially when dealing with large insurance companies and assessing and understanding the voluminous policy terms and conditions. It’s also important to note that receiving a TPD benefit can have significant financial implications for personal taxation and on government benefits and entitlements, should the claimant be receiving any. As discussed above, there are also important time frames to meet in making a claim.
For all these reasons, a person wishing to make a TPD claim should seek professional legal and financial advice before proceeding. Our experienced team at ROC Legal can help you understand your rights, help you assess eligibility, and navigate the claims process effectively and efficiently. Contact us today for more advice.