Total & Permanent Disablement (TPD) through Super – The Hidden Insurance
Most super funds contain some kind of default life and total and permanent disablement (TPD) insurance cover for members.
However, many people who suffer injury either do not know that they may be entitled to claim a TPD benefit through their super fund or simply don’t understand the eligibility criteria.
What is TPD Insurance?
A claim for a TPD benefit is not a personal injury claim.
There is no requirement to prove that the injury arose from the negligence of another person, nor is there any requirement that the injury be caused by a workplace incident or motor vehicle accident.
Rather, TPD is a type of insurance held either as a private policy outside Super, or in the context of Super Funds, a group policy taken out by the Super Fund trustee for the benefit of Super Fund members.
Quite often an injured person will be a member of several different Super Funds and will be eligible to claim on all of those TPD policies as long as they can meet the eligibility criteria.
In most cases, you do not need to be actively contributing to the Fund at the time of injury to be eligible to claim a TPD benefit.
What are the requirements to claim on TPD Insurance through Super?
To successfully claim a TPD benefit through Super it will be necessary to prove that the injury meets the definition of “total and permanent disablement” relevant to the particular Super Fund.
Unfortunately, Super Funds generally will only offer “Any Occupation” TPD cover rather than “Own Occupation” TPD cover. This means that to succeed in a TPD claim through Super the injured person needs to establish that their injury has caused them to become permanently disabled and unlikely to work again in that person’s own occupation and any occupation to which the injured person is suited by education training or experience. This definition sets a high bar for an injured person to succeed in a TPD claim through Super.
Before making a claim for TPD through Super it is important to understand all eligibility criteria relevant to the particular Super Fund and the policy of insurance. At a minimum, you should request a copy of the Trust Deed and the Contract of Insurance from the Super Fund Trustee. It will then be necessary to gather relevant medical evidence in support of the claim before requesting the Trustee of the Super Fund to make a decision.
It is critical to the success of any claim to provide all necessary information, including medical evidence, to the Trustee before asking the Trustee to make a decision. It can be very difficult to introduce new evidence in support of the claim at a later date if the claim is rejected.
What if the Super Fund Trustee rejects the claim?
The Trustee of a Super Fund and the Trustee’s Insurer are bound by legislation to act reasonably and in good faith when considering a member’s claim for TPD.
If a claim is rejected there are several avenues available to the injured person to challenge the decision, including internal review, complaint to the Superannuation Complaints Tribunal and litigation through the courts.
How are TPD benefits paid?
If a claim is successful the TPD benefit is generally paid in a lump sum. However, the method of payment chosen could have significant taxation implications.
It is advisable to obtain expert financial and taxation advice from a suitably qualified financial advisor before deciding on the method of payment.
Why submit a TPD claim?
A TPD claim is a separate and distinct benefit that an injured person may be entitled to, irrespective of whether they also may be entitled to bring a claim for personal injury damages.
Often, an injured pursue will be able to pursue both for example, if the person suffers injury in a motor vehicle accident that person may be able to pursue a personal injury CTP claim and also claim the TPD insurance benefit through their super fund.
- If you have suffered a significant injury you may be eligible to claim a TPD benefit.
- Check to see whether you are a member of multiple funds as you may be eligible for multiple TPD benefits.
- Request a copy of the Super Fund Trust Deed and the Master Insurance Policy to understand what criteria you must meet to be successful in your claim.
- Preparation is key as it is very difficult to introduce new evidence after the Trustee has rejected a claim.
- If you are successful in a claim for TPD benefits you should always seek expert financial advice about investing any lump sum amount and the taxation consequences of the varying methods of payment.
This article was written by Mike Klein, a Director of GKS Law and an experienced Compensation and Insurance Lawyer who can assist you with any aspect of claiming a TPD benefit through Super.