A TPD claim is made on the basis that a person is no longer able to work due to illness or injury.

A claim may be brought on the basis of:

• Physical injury
• Mental health issue
• Physical + associated mental health issues

More claims are now brought in relation to mental health issues than any other single category.

Mental health conditions are most commonly brought on the basis of:

• Reaction to severe stress – PTSD, acute stress reaction
• Depression including chronic depression
• Anxiety disorders including panic attacks
• Schizophrenia
• BiPolar disorder

Physical injuries and conditions are most commonly brought on the basis of:

• Musculoskeletal condition including back condition & osteoarthritis
• Accidents including motor vehicle and work
• Nervous system disorders including autoimmune disease
• Cancer

It is not uncommon for a TPD claim for a physical condition to include a related mental health condition.

It is important the insurer understands your unique circumstances including the full nature of your circumstances.

Your Insurer will make an assessment of your claim for based on your date of disablement.

This is the last date that you last worked due to illness or injury.

It is important information to your TPD claim because

• It is often unclear for people with chronic conditions when they last had capacity for employment.
• Sometimes people make failed attempts at return to work.

Your claim will be assessed against this type of information, as per Policy terms.

Cover may be assessed against the more restrictive ADL test for TPD if the date you last had capacity for work is not correctly identified to the Insurer.[1]

We recommend that you obtain legal advice before lodging your claim for TPD.

RELATE ARTICLE: GET YOUR TOTAL & PERMANENT DISABILITY CLAIM RIGHT, FIRST TIME!

[1] ASIC reported in 2019 that approximately 60% of people who were assessed that ADL test TPD had their claims denied: ASIC REP 633 Holes in the Safety Net

For a successful claim to be made for TPD, claimants usually need to establish under Policy terms:

• The life insured must have been absent from work for 3 to 6 consecutive months
• The injury or illness has caused the life insured to be absent from work
• The insured is under the care of a treating doctor
• The trustee or insurer must form an opinion as to the likelihood that the life insured will ever return to work
• Unlikely / Unable to return to ‘work’ – by reason education, training or experience

In addition, policies usually require that to benefit from ‘any occupation’ TPD cover a claimant can demonstrate, depending on Policy terms:

• Capacity for employment, at time of commencement of cover or at date of disablement
  or
• No pre-existing illness or injury did not cause your departure from employment
  A claim for TPD is not likely supported by the Insurer for a lump sum payment unless it is satisfied that, on balance, it is unlikely you will return to work, based on your education, training or experience.
• This requires appropriate medical and personal information for the insurer to draw this conclusion

It is crucial that the insurer is able to establish all key elements of their Policy terms before they can support a claim.

• Policy terms will vary so it is important to check the particular wording of cover

A claim for TPD that is supported by the Insurer will be referred to the Super trustee for a final decision on the claim.

The Trustee will require two certified medical certificates (permanent incapacity) in support to make a decision on early release of funds.

A treating doctor will be required to confirm the Member is unlikely to have capacity to return to gainful employment based on their education, training or experience.

Tax may be payable on early access to super on the basis of permanent disablement.

You should consider financial advice before you make any early access – withdrawal of benefit.

ASIC reports that there are Holes in the Safety Net in relation to the assessment of TPD claims.

TPD claims have above-average decline rates, higher withdrawal rates and excessive delays in claims assessment. [2]

A number of challenges can arise in TPD claim assessment:

• Confusion around what further information is required to support the claim
• A restrictive ADL assessment – more likely to be refused by Insurer [3]
• Failure of insurer to make a decision on claim – or excessive delay
• No insurance cover – as assessed (date of disablement)
• A time limit issue in lodging your claim – for certain types of TPD cover [4]
• Failure to satisfy the relevant TPD test – often based in loose or ineffective language or incomplete evidence

We can assist when things go wrong.

RELATED ARTICLE: When your Total & Permanent Disability (TPD) claim isn’t going well – MATT’S STORY

[2] ASIC reported in 2019 that approximately 12% of TPD claims were rejected, with almost the same number of claimants 12% of all lodged claims, withdrawing their claim prior to final assessment: ASIC REP 633 Holes in the Safety Net

[3] ASIC reported in 2019 that approximately 60% of people who were assessed against the ADL test for TPD had their claims denied: ASIC REP 633 Holes in the Safety Net

[4] Check your Super statement and Policy terms – sometimes your Super statement will identify time limit eg You must notify your Super fund of an eligible claim within 5 years of date of disablement

Some policy requires that a health and personal circumstances declaration which occurs:

• when apply for insurance cover, or renew or extend your existing policy

You have to tell the insurer everything about you and your situation that is relevant or could reasonably be expected to be relevant to the insurer’s decision to insure you

Your insurer should equally explain this duty of disclosure to you before you respond.

The duty of disclosure is an important part of an insurance contract as it allows insurance companies to correctly asses & price their cover to you.

If you do not correctly disclosure your circumstances, the Insurer may seek to reduce cover or refuse your claim.

We recommend you speak with us to obtain legal advice if this occurs.

Most TPD policies have more than one version of cover:

• ‘any occupation’: this is the most common test for TPD
  Example
  illness or injury which causes the life insured to be incapacitated to such an extent as to render the member unlikely ever to engage in or work for reward in any occupation or work for which he or she is reasonably qualified by education, training or experience.
  
• ‘activities of daily living’ (ADL): applies where ‘restricted’ or ‘limited cover’ applies
  Example
  Unable to perform, without assistance, at least two of the five activities – eating, bathing, dressing, toileting, mobility
  Did you know?
  ADL tests for TPD are more difficult to meet. Many people who are unable to work due to illness or injury cannot meet the restrictive ADL test for TPD.
  
• ‘Loss of limb’ / ‘loss of eye sight’ /’25 % whole person impairment’
• ‘Own occupation’: cover is usually only available in limited policies outside Super.

Insurers have more than one version of TPD cover as policies are designed to limit to cover (via ADL test) for people who may have:

• Limited capacity for employment at the time they obtain cover or at date of disablement
• Pre existing conditions which caused their departure from employment

It is important to understand the version of cover that the Insurer is applying to your claim.

Without clear information which can demonstrate ‘any occupation’ test should apply, your Insurer may assess your claim against to the more restrictive ADL test for TPD.