Total and Permanent Disablement Insurance (TPD) is designed to provide a lump sum benefit to the claimant in the event of a medically diagnosed event that renders them unable to work again.
The purpose of TPD is to help take the financial pressure off the claimant if they suffer an illness or injury that leaves them permanently disabled. Someone claiming TPD will be paid a lump sum benefit to eliminate debts, pay for medical expenses or fund permanent lifestyle changes, such as moving home to a more accessible location for their condition.
Having a claim for TPD approval can be a difficult process for the claimant. Most TPD insurance policies are provided by superannuation funds. TPD superannuation funds will require that the claimant has been off work for a period of 3 - 6 months before they will even consider a claim. After this period has been satisfied, the claimant will need to provide evidence that two of their treating medical practitioners have certified that the claimant will be unable to ever return to work in any occupation for which they are suited by way of education, training and experience. The process of determining this involves seeking professional advice from lawyers and financial advisors.
The general definition of TPD is qualified by the insurer. The insurer’s definition will often be similar to these three main definitions:
- Any occupation: This pays a lump sum if the claimant becomes permanently disabled and is unable to work in their own occupation or any occupation to which the claimant is suited by education, training or experience.
- Own occupation: This pays a lump sum if the claimant becomes permanently disabled and is unable to work in their own occupation. As these terms are quite specific and payout is more likely, this is the most expensive form of TPD.
- Living expenses and Non-Working: This ignores occupation and pays a lump sum if the claimant has become permanently disabled and is unable to independently conduct two or more of the six listed Activities of Daily Living (eating, bathing, dressing, toileting, transferring, continence). They need to be severely disabled to qualify. This is considered the most difficult TPD to claim.
The reason it is important to understand the definitions of TPD is that the main cause of the dispute for TPD is over the standard definition of TPD. Some policies will need the claimant to follow specific ongoing advice of a specialist or even a rehabilitation program. Some policies require waiting periods of up to 3 months before a payment is made. Moreover, TPD payments will often have exclusions for pre-existing medical conditions.
In summary, there are six main criteria used to assess the claimant’s eligibility. That being:
- The level of disability and whether it is unlikely the claimant will return to their previous role. For example, the loss of a limb or eyesight.
- A TPD policy inside of superannuation will only cover an ‘any-occupation’ disability. TPD cover will typically fall under either an own-occupation cover or any-occupation cover. ‘Any-occupation’ disability is when the claimant is unlikely to ever be able to engage in any job suited to their education or experience. This includes a job that has basic requirements. This also includes a situation where it is unlikely that the claimant will ever return to full-time work in their previous occupation.
- There are common waiting periods between insurers, which could be either 3 or 6 months continuous absence from work. However, there are no waiting periods for some conditions such as major head trauma.
- Some insurers require that the claimant meet a minimum level of work before they are eligible. Such as 12 months of employment, full time work and minimum hours.
- Ability to perform daily activities.
- Some policies will require the claimant to show ongoing medical care to improve their consideration or to prevent further illnesses, such as rehabilitation or attending appointments.
If you have further questions about TPD contact Nathanael Coles at ncoles@franklaw.com.au.
This is not legal advice.
Image by Steve Buissinne from Pixabay.
