Total Permanent Disablement (TPD) FAQ's
What is TPD insurance?
Total Permanent Disablement (TPD) insurance is a type of life insurance which pays you a specified lump sum in the event you are found to have total and permanent disability as a result of injury or illness. The key words are total and permanent. Benefits under TPD insurance are usually lump sums paid to you if you can't ever go back to your normal job or any other suitable work because of your injuries or illnesses.
How do I know I have TPD insurance?
Many people are unaware that they may already have TPD cover as a result of superannuation and / or other insurances that they hold. There are various ways that you may be entitled to TPD benefits, including through:
- A superannuation policy;
- Life insurance policy; and
- Mortgage protection or loan protection insurance.
What does TPD mean?
It really depends on the policy that you hold. In some instances, you do not usually have to be unfit for all work; only suitable work given your education, training or experience over the long-term. For example, if your work background is in manual labour or process work and you have a bad back, you might have a TPD claim even if you could otherwise do clerical work without any skills or previous experience.
However some TPD policies include retraining clauses. For your claim to be successful you would have to show you can't go back to work that you could reasonably be retrained to do such as in the clerical case above. Other policies have easier definitions (own occupation) or harder definitions (activities of daily living tests). It's important to understand the wording of the policy before making a claim.
How do I make a claim for TPD?
To lodge a TPD claim, specific steps need to be taken and these depend on the policy you hold or the insurance company you are with, and whether or not you are covered. Generally speaking, the superannuation fund or insurance company may require you to complete several claim forms and medical certificates will need to be completed as well.
What injuries/illness should I include in a claim?
You can include all your health problems for a TPD claim. Some policies might exclude pre-existing conditions or mental health problems and most superannuation funds include all your health problems, including pre-existing conditions. Some injuries and illnesses have different tests depending on the policy.
What is a TPD benefit?
A TPD benefit is usually a lump-sum payment calculated from the date you last worked. If the benefit is through a super fund, it will also usually include your superannuation account balance. There may be tax payable on the TPD benefit if it's through your superannuation account – see below.
What is the value of my TPD benefit?
The amount that you are entitled to claim will depend on the insurance arrangements in your policy and is usually based on age. If you have more than one policy, you might be able to make more than one claim.
Will I have to pay tax on my benefit and will it affect Centrelink?
TPD payments made through superannuation payouts are taxed at a concessional rate and can affect Centrelink payments if you receive them. You can also defer or reduce a payout by transferring some of the lump sum payment into a superannuation rollover fund. It is always recommended you get financial advice about the impacts of any benefit you receive and how to make the benefit work for you.
Will it impact my ongoing injury benefits?
A TPD payment is also unlikely to impact your weekly payments from a CTP or workers compensation insurer. Technically, your TPD Benefit may be considered a superannuation lump sum that relates to your employment but we have successfully argued with insurers that it should not affect your weekly payments.
What can I spend my TPD benefit on?
You are free to use the TPD payout for anything that makes your life easier and there are no restrictions on how the money is spent.
What if my TPD claim is rejected?
If your TPD claim is rejected, it is normally because your insurer or superannuation fund believes you still have the capacity to work. It is important to know that there are also time limits to seeking a review of an unfavorable decision. If your claim has been rejected then you should seek legal advice as soon as possible.
Are there any traps or pitfalls when making a claim?
There has been an increase in TPD claims which has meant there have been deliberate moves by insurers to restrict the ability to make a claim. These can include 'sunset clauses', activities of daily living tests and stricter definitions on what work you must be able to perform. It is important you disclose the right information and all relevant health conditions.
Why should I seek legal advice?
Helping people understand their entitlements and what they might be able to claim is a very important part of what we do at Carroll & O'Dea Lawyers. Our highly qualified lawyers have extensive experience in TPD claims. If you have a lawyer running your claim it is more likely that the evidence in support of your claim will be properly prepared. Insurance companies can also be difficult to deal with particularly when you are suffering from a medical condition. Having a lawyer means that the stress of dealing with insurers is lifted whilst you get on with life.
It is unfortunate but TPD claims can be complex and can sometimes end up in Court so it is important you have a lawyer from the start. We encourage you to contact Carroll & O'Dea Lawyers to assist with the process as we work on a 'no win, no fee basis'.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.