Own occupation policy. If your disability is such that you cannot perform your chosen occupation and you have taken out a policy that specifies the inability to perform your ‘own’ occupation (rather than ‘any’ occupation), then you will more than likely be paid out in a lump sum. If in the future, you are then able to perform some sort of work other than your chosen occupation, there is nothing to prevent you from doing so.
Any occupation policy. On the other hand you take out TPD cover that specifies the inability to perform ‘any’ occupation, then it will be more difficult for you to qualify for a payout and if you do, it will mean your disability is truly total and permanent and you will thus be unlikely to return to the workforce. For this reason, TPD insurance specifying ‘own’ occupation is more expensive and is only available for certain occupations.
An exclusion is when an insurance company won’t return a benefit for a TPD claim due to personal factors you didn’t declare prior to your policy, or because of acts that void cover.
Instances include failing to declare pre-existing medical conditions or participating or participating in violence. Here’s a list highlighting circumstances where you won’t receive a payout under your TPD policy.
If you don’t declare your pre-existing medical condition. You won’t be covered by a TPD policy if you show symptoms or seek medical advice, and there are signs showing you were already suffering a pre-existing condition.
What about if you become unemployed and didn’t declare your condition? If you find yourself out of work because of an injury that happened prior to your policy, you won’t receive a benefit.
Committing self-inflicted and harmful acts. If you try to commit suicide or cause self-harm and become disabled, you won’t be covered.
Failure to seek timely diagnosis or treatment. If you ignore your own personal duty to seek medical attention or advice when required, you will void your policy.
A Congenital condition. You won’t receive a benefit if an insured individual or child is found to have suffered a birth defect or anomaly, leading to a disability.
if you’re pregnant. You won’t receive benefits unless you see out a set waiting period to prove you’re temporarily or permanently disabled. This also applies to a miscarriage. Industry standards see most insurers offering a 9 month waiting period before benefits are paid.
If you live a dangerous lifestyle. Your claim could be knocked-back if you’re found to have put yourself directly or indirectly in danger. This could be a result of extreme sport accidents like base jumping.
If you’re guilty of a crime. Your insurer will reject any claim you make for a benefit. You are not covered for time behind bars.
An Act of War. This includes participating in violence, or planning harmful attacks, regardless of whether war has been declared.
Michael's TPD decision
Can a TPD payout be used to cover medical expenses in a private hospital when the person is in pain and the public waiting list is 18 months long?
Hello Jill,
Thank you for your comment. :)
Most TPD insurers have a 3-12 months waiting period and pre-existing exclusions set (e.g. suicide or attempted suicide related injury). As long as you have fully disclosed the conditions, meet the waiting period and the “definition” of the cover you took, it may be qualified for a claim as most TPD products are fully underwritten. Meaning, all terms and other “special clauses” should have been agreed on before it was issued to you.
You may want to speak to your insurer or insurance agent about this matter. Also, you can refer to the Product Disclosure Statement of your actual insurer’s product for details.
Hope this helps.
Cheers,
Jonathan