Total and permanent disability (TPD) insurance claims
Everything you need to know about making a TPD claim
Suffering a serious injury or illness is stressful enough – don't let the total and permanent disability (TPD) claims process add extra pressure. This guide will help you understand when and how you can lodge a TPD insurance claim, so you know exactly what to expect and you can ensure the claims process is as smooth as possible.
What is a TPD claim?
TPD insurance provides a lump-sum payment if you ever suffer a serious injury or illness and are no longer able to work. The claims process can be lengthy, because insurance companies want to be certain that a disability is total and permanent, before providing the lump sum.
Am I eligible to make a TPD claim?
There are a few basic conditions you'll have to meet before you become eligible to make a TPD insurance claim. The specific criteria varies between different insurance companies and individual policies.
It's worth checking with your insurance company to find out what requirements you have to meet, before making a claim. We've listed a few common variations in the table below:
|Requirement||Variations between insurers|
|Your disability is total and permanent|
|You've met the waiting period|
|You can prove work history|
|You've lost some independence|
|You're complying with ongoing medical care|
How do I make TPD claim?
The exact claims process varies between insurance companies and different super funds. However, in general, this is usually how it works:
|Step 1||Contact your insurer or super fund. Tell the company about your intention to make a claim and find out what evidence you'll need to provide.|
The exact process varies, but a member of the claims team will be able to walk you through next steps. You may be assigned a case manager at this point.
|Step 2||Submit your claim. Fill out any forms provided and include evidence of your condition. Medical reports and employer information, along with relevant statements, should be included.|
Once you've passed this onto your case manager, they'll keep you up to date throughout the process, and let you know whether you need to provide anything else.
|Step 3||Your claim is assessed. The insurer will decide whether you are eligible for a claim. In some cases, the insurer may request further evidence, such as a second opinion, or further medical exams.|
|Step 4||An initial decision is made. After assessing the information, the insurance provider will accept, defer or decline your claim.|
|Step 5||Respond. You may be given an opportunity to provide more supporting information if the claim is initially rejected. You can also lodge an appeal if you don't agree with the decision.|
- Accepted: The benefit will be paid and your insurer will be in touch to finalise payment details.
- Deferred: Further assessment is required so your payment will be delayed.
- Declined: You have not satisfied the conditions of the policy and will not receive payment.
Did you know? If you have TPD insurance with more than one super fund, you might be able to claim multiple benefits. Contact your funds directly to find out how they handle multiple benefits.
How long does a TPD claim usually take?
A straightforward TPD claim shouldn't take more than 2-3 months to be completed, while more complex cases may take around 6 months. Unfortunately, difficult and contentious cases can take years to settle.
If your claim is taking too long, you may want to consider lodging an internal complaint to the insurer or superannuation fund, or to the Australian Financial Complaints Authority (AFCA). You may also want to consider hiring a lawyer who specialises in TPD claims.
What's the difference between "any" and "own" occupation?
Your likelihood of being able to make a TPD claim may largely depend on whether you have insurance for any occupation or own occupation.
|Type||What it means|
|Any||You'll receive a benefit if your injury or illness stops you from working in any occupation. This is typically the cheaper option, but it's harder to make a successful claim.|
|Own||You'll receive a benefit if you're unable to work in your own occupation. This is more expensive, but can be easier to prove when it comes to claim time.|
Do TPD benefits get taxed?
This is a little tricky, and we explain it better here, but in a nutshell:
- If TPD insurance is through your super: The benefit isn't taxed when it's initially credited to your super account. However, if you withdraw the money from your super early – which means before the age of 60 for most people – it is subject to tax.
- If TPD insurance is through an insurer: The benefit is not taxed. Your premiums were subject to tax, so you don't pay tax on the payout. Easy.
The effective tax rate on withdrawal can vary between less than 1% to over 18%. In fact, a person with multiple TPD claims may have a different tax rate on each one.
How to get a TPD claim approved
The best way to get a TPD claim approved is by providing as much information as possible and cooperating with your insurance company.
You may have to comply with post-injury or post-illness medical requirements. For example, your insurance company may require ongoing rehab or specialist appointments.
Remember, you have a duty of disclosure when lodging a TPD claim. That means you have to tell the company any information that's relevant to the outcome of your claim.
Can you claim TPD for partial disability?
Although TPD insurance refers to total and permanent disability, some insurance companies will provide a payout for partial disabilities.
This means you'll have cover for any income lost if you can only work at a reduced capacity because of sickness or injury.
Benefits may be paid out under the following options:
- Hours-based. You'll receive benefits if you can't work as many hours. To qualify, you'll need to earn less than you did before your disability and be under medical care.
- Duties-based. You'll receive benefits if you're unable to perform all the duties essential to your previous job and are making less money as a result.
Some policies will also provide partial payment if you suffer certain disabilities. This may include loss of limbs or loss of sight.
Can you claim TPD for mental illness?
It can be difficult to prove that you'll never be able to return to work due to mental illness. However, insurance companies will take certain factors into consideration and may pay out in some circumstances.
Insurers may look at the type of treatment prescribed, as well as how often you're having the treatment. Insurers can also defer the payment if you can't prove your condition is permanent or severe enough to warrant a claim. Deferral can last until all treatment options have been tried.
Could your TPD claim be disputed?
In some cases, your TPD insurance claim may be disputed. This means your insurance company might not pay your claim. There are a few reasons why this might happen:
- Varied definitions. There is no standard definition of TPD. Your insurance company might not agree that you are totally and permanently disabled.
- Ongoing requirements. Some TPD insurance policies will only pay out if you follow ongoing specialist advice or even a rehabilitation program.
- Waiting periods. Some policies enforce waiting periods before a payment is made. This means you might not be able to access your benefit immediately.
- Exclusions. TPD insurance doesn't cover everything. If you're totally and permanently disabled due to a pre-existing medical condition, you might not receive the benefit.
What if your TPD claim is denied?
It's possible that your TPD claim might be denied. If that happens, there are still measures you can take to get your case reassessed.
- Understand why you were denied. If your claim is rejected, your insurance company has to tell you why. Understanding the company's reasoning is the first step to forming a strong counter-argument.
- Put together your case. Gather evidence that proves your insurer was wrong to reject your case and supply any supporting evidence. Perhaps your insurer declined your claim because it believed the illness was pre-existing, but a doctor disagrees.
- File a dispute with the insurer. Your insurer will have an internal dispute resolution process (IDR). Send your case to your insurer's resolution department and it will be reviewed by a team which did not initially handle your case.
- Wait. Insurers have 45 days and super funds have 90 days to make their final decision, although they do have to communicate with you at reasonable intervals during that time.
If things still don't work out:
- Talk to AFCA. Lodge a complaint with the Australian Financial Complaints Authority (AFCA).
- Take legal action. There are law firms that specialise in having TPD claims approved.
TPD claim stories
"I wish I had known sooner - Julia, 57"
Julia is a former ambulance officer from Queensland. She had TPD insurance through her super fund, and made a claim in 2016 as she was suffering from fibromyalgia.
In the two years leading up to the claim, Julia had also been suffering from PTSD. When she finally lodged the TPD claim for her fibromyalgia, she was expecting to receive $450,000.
However, after undergoing an 18-month claims process, Julia was surprised to learn she would only be receiving $300,000 in disability cover.
"They told me I could only receive $240,000 because of my age, which is almost half of what was promised," Julia told Finder. "Then they said they would backdate the payment to 2015, so I would receive 300,000."
Finder contacted Julia's super fund and confirmed that the value of the potential TPD benefit policy does reduce as you get older, but the payment will be backdated to the date of the claim.
"Make sure you check if your cover diminishes as you get older," Julia added. "Age reduces cover and it's something I wish I had known sooner."
It's not the only advice Julia has for anyone else going through a TPD claim – she also urged other policyholders to be well-prepared for any insurance-mandated medical assessments.
"Be aware of the independent medical assessments, especially those provided by the insurance company," she said. "Demand taking in a support person who can witness and verify what he or she said."
Frequently asked questions about TPD claims
How long does a claim take to process?
Can I claim TPD and Income protection at the same time?
Should I get a lawyer to help with a TPD claim?
Do TPD payouts affect Centrelink?
Can you claim multiple policies?
What is a duty of disclosure? Do I have to do this?
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