Total and permanent disability (TPD) insurance is an insurance product that lets you claim benefits if you become sick or injured (or both) and unable to work again as a result – regardless of what caused the injury or illness. Most people will have TPD benefits available through their superannuation fund – they just don’t know it! If you cannot work because of injury or illness, being able to receive TPD benefits will be an important part of ensuring your financial wellbeing. This blog provides practical information on what you need to know, including the amount you can reasonably expect to be paid if you make a successful claim. Read: “What is a TPD claim?”

I have TPD insurance through my super?

Yes! Did you know that you may have TPD insurance even though you’ve never applied for it? This is because in most cases, superannuation-based insurance cover is automatically given to you by your super fund under a group insurance policy that covers most or all super fund members. What this means is that unlike other insurance policies, where you specify the level of cover that you want, the super fund and insurer will usually provide you with an amount of cover based on your age. Of course, your fund may also allow you to specify a particular amount of insurance cover where you – likely in exchange for higher premiums each year. In either case, it is important to read the fine print in your policy about how your age and other factors including the definition of TPD that your policy uses, may affect your level of cover.

I purchased insurance cover outside of my super fund

If your TPD insurance cover is not provided by, or through your superannuation fund, you have probably applied for this cover by contacting an insurer directly or through a financial advisor. In doing so, you likely specified how much cover level, and heard from your insurer or financial advisor about how your level of cover may change or be affected with age. Again, when considering making a TPD claim, it is important to read the fine print in your policy about how your age and other factors, including the definition of TPD that your policy uses, may affect your level of cover.

So how much will I be paid if I make a claim on my TPD insurance policy?

Again, it is very important to read the fine print in your policy. Many people who cease work due to sickness or injury look at their superannuation statement or insurance schedule at the time that they are claiming and assume that this is the amount of the TPD benefit that they will be paid if they win their TPD claim. This is incorrect. The amount that you are paid if your TPD claim is successful is worked out based on the level of insurance cover when you last worked. Changes in the amount of your insurance cover after you finish working are unlikely to change the amount that you will be entitled to if you get sick or injured and make a successful claim.

Will I be entitled to the whole benefit?

Yes. If your claim is accepted by the superannuation fund and insurer, you will usually be paid the full amount which you are insured for at the time that you cease work. It is very rare for a superannuation fund or insurer to make an offer to pay you an amount less than the insured amount. However

  • some funds may pay the amount in instalments, rather than a lump sum, or vice versa. Some funds may pay, and
  • some funds pay only a percentage of the insurance benefit if you cease work and will only pay the remaining percentage if you satisfy a more difficult test.

As you can see, decisions of insurers and super funds based on the fine print in your insurance policy can make a major difference to whether you make a successful claim, and the benefit that you are paid. Don’t assume that the insurer or super fund is always right! At Littles, we are insurance law experts and can help you push back against insurers that are deploying loopholes and technical legal definitions against you. We provide a FREE super claims check, and ensure that you get all of the benefit that you are entitled to.

Don’t delay – seek advice now

If you have an illness or injury that prevents you from working, you might be worrying about how you are going to pay your bills and put food on the table. You could be entitled to receive a TPD lump sum, as well as other insurance benefits. Get in touch with Littles for a free super claims check. We can help you understand what you’re entitled to. Know where you stand, and get peace of mind.

Free advice and no upfront fees

Not only do we offer a FREE claims check – we handle most insurance claims on a no win, no fee basis. Our Head of TPD and General Insurance, Rowan McDonald, is an insurance law expert. If you think you might have a claim, get in touch with Rowan and his team for high quality legal advice.

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