At a glance:
- TPD insurance covers more than just accidents, including chronic diseases and mental health disorders.
- You can claim multiple TPD policies if you have more than one active superannuation fund.
- TPD claims require thorough documentation and may benefit from legal assistance for success.
Total and Permanent Disability (TPD) claims can be a labyrinth of legal terms, procedures, and exceptions. It can often create a myriad of misconceptions among claimants. The following article aims to debunk some of these common myths and provide a clearer understanding of TPD claims.
Introduction to TPD Claims
TPD insurance is a financial lifeline for individuals incapacitated by a severe injury or illness, preventing them from returning to work. While the concept may seem straightforward, the reality is often marred by misunderstandings and misinterpretations.
Common Myths and Misconceptions About TPD
Misconception One: TPD Coverage is Limited to Accidents
Fact: Contrary to popular belief, TPD insurance isn’t solely for injuries. It extends to various illnesses and conditions, including chronic diseases, mental health disorders, and degenerative conditions. The key criterion for TPD coverage is the permanent compromise of an individual’s ability to work and perform daily activities, irrespective of the cause.
Misconception Two: You Can’t Claim Compensation Twice
Fact: There’s a misconception that if an individual has received compensation from a statutory scheme for an injury, they can’t pursue a TPD claim to avoid “double compensation.” However, most TPD policies allow payouts even if compensation has been received from a statutory scheme, as long as the policy criteria are met.
Misconception Three: You Can Only Claim on One TPD Policy
Fact: Another common misconception is that individuals can only claim on one TPD policy, even if they have multiple policies. However, if someone has more than one active superannuation fund, each with an attached TPD policy, they can lodge multiple claims, provided the policy conditions permit and criteria are met.
Misconception Four: The Claims Process is Simple
Fact: Many people believe that the TPD claim process is straightforward and can be handled directly with the insurer without legal assistance. However, TPD claims involve a comprehensive analysis of policy documentation and the satisfaction of specific criteria. They often require detailed medical evidence and may benefit from legal expertise to navigate complexities and increase the chances of success.
Misconception Five: TPD Coverage is Limited to Physical Disabilities
Fact: TPD insurance covers both physical and psychological disabilities. Conditions such as severe depression, anxiety, PTSD, bipolar disorder, and schizophrenia are included under TPD coverage. The focus is on how the disability or illness affects the individual’s ability to work, regardless of its nature.
Misconception Six: TPD Claims are Difficult to Win
Fact: While TPD claims can be complex, with the right evidence and legal support, they can be successful. Many individuals receive TPD benefits with proper guidance and assistance throughout the claims process.
Misconception Seven: Hiring a TPD Lawyer is Expensive
Fact: Some believe that hiring a lawyer for a TPD claim is costly. However, many lawyers work on a ‘No Win No Fee’ basis, meaning fees are only payable if the claim is successful, making legal representation accessible to those in need.
Misconception Eight: TPD Payouts are Taxable
Fact: TPD payouts are typically tax-free, depending on how the lump sum is managed. Consulting a tax professional can help understand any potential tax obligations associated with TPD payouts.
Misconception Nine: Making a TPD Claim Reduces Your Super Balance
Fact: TPD payouts come from an insurance policy and do not reduce an individual’s super balance. They provide additional financial support separate from existing superannuation funds.
Misconception Ten: TPD Benefit Payout Affects Centrelink Benefits
Fact: While withdrawing TPD funds from a super account may affect Centrelink entitlements, a TPD benefit deposit into the account does not impact Centrelink benefits until withdrawal.
Misconception Eleven: TPD Claims Happen Automatically
Fact: TPD claims require a legitimate and approved claim before a payout can be made. They involve a thorough assessment process by the insurer and do not automatically trigger a payout.
Misconception twelve: You Must Be Disabled to Qualify as TPD
Fact: Many individuals mistakenly believe they must be severely injured or ‘disabled’ to qualify for Total and Permanent Disability (TPD) insurance. However, meeting the TPD definition isn’t equivalent to satisfying the disabled criteria.
Typically, to meet the TPD definition, individuals must demonstrate that their injury, illness, or mental health condition prevents them from working in their regular job or any other occupation aligned with their skills, training, or education.
Long-term disability doesn’t necessarily equate to being ‘disabled’; it merely indicates an inability to perform part or all tasks in one’s regular job. In fact, one could claim a TPD payout and then pursue retraining for a different industry, subject to policy terms and conditions. Seeking legal advice before making such decisions is advisable.
Misconception thirteen: It’s Difficult to Win a TPD Claim
Fact: While some believe TPD claims are challenging to win, having a successful claim isn’t impossible, especially with expert legal guidance.
It is crucial to provide compelling evidence that illustrates the level of disability and its impact on earning capacity. Medical documentation, including clinical notes, test results, and assessments from doctors and specialists, strengthens the case.
In conclusion, dispelling these misconceptions provides individuals with accurate information. It ensures they receive rightful benefits when needed to make informed decisions regarding TPD insurance.
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Mike Wallis
Mike has over 25 years experience, having spent his first seven years working as a Broker at Jardine Lloyd Thomson in Melbourne and in 2002 was transferred to JLT’s Accident and Health Department in London. For four years (2002 – 2005) Mike was a specialist A&H Lloyd’s Broker and during this time developed excellent relationships with the Lloyd’s A&H underwriting fraternity. In 2006 he returned to Australia in a senior broking position with overall responsibility for Placement Strategy, including the implementation of underwriting facilities and the various authorities granted by Lloyd’s. Mike was the underwriter at two specialist Underwriting Agencies prior to founding Aspect Underwriting in 2016.
