TPD means “Total and permanent disability”. The purpose of TPD insurance is to pay a lump sum under the circumstances that you become totally and permanently disabled based on the terms of your insurance policy. Different policies perceive the meaning of TPD differently. In 2011, the NSW Court of Appeal unified the meaning of TPD to a ‘common form’ which can be described as an:

“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.”

Despite this unified TPD meaning, there are three main definitions used in TPD policies:

  • Own occupation – You are considered totally and permanently disabled if you are unable to work in your ‘own occupation’ ever again. ‘Own Occupation’ cover is typically more expensive and can no longer be held within superannuation funds.
  • Any occupation – This definition follows the ‘common form’ TPD definition mentioned earlier. If your TPD policy is ‘any occupation’ then you will be considered totally and permanently disabled if you are unable to work ever again in ‘any occupation’ for which you are suited to by ‘education, training or experience’. Many insurers are adding ‘rehabilitation’ or ‘retraining’ to this definition, making it harder to meet.
  • ADL – You are defined as totally and permanently disabled if you are unable to perform (usually three), ‘activities of daily living’ such as feeding, toileting or bathing yourself.

In addition to these three TPD definitions, there are several other types of TPD covers. These covers use a different TPD meaning, these include ‘home duties’ and ‘loss of limbs’. The variety of definitions make choosing a TPD cover a difficult and time-consuming task.

The Wrong TPD Policy Will Cost You

Unfortunately, choosing the wrong TPD definition may be the difference between a successful and unsuccessful claim. One example of this is the ADL definition. Because ADL cover is only paid to those in “the most catastrophic circumstances”, ADL cover has a 5 times higher failure rate than general TPD insurance. This means your claim will be 5 times more likely to fail with ADL than General TPD cover, despite having the same:

  • income;
  • insurance premium;
  • insurance policy;
  • superannuation fund; and
  • same injury or condition.

How Is TPD Insurance Distributed?

TPD insurance helps to cover the costs of your rehabilitation, debt repayments and future cost of living. 

There are three main methods in which TPD cover is distributed:

  • group cover – purchased by the trustee of a superannuation fund or an employer, for the benefit of fund members or employees;
  • advised or retail cover – distributed through financial advisers; and
  • non-advised or direct cover – distributed directly by insurers or their partners or affiliates.

Among these three options, group policies are the main distribution channel. This is due to 90% of consumers getting TPD insurance through their superannuation fund.

TPD insurance through superannuation funds has drastically spiked since the Superannuation Guarantee (Administration) Act 1992. Superannuation funds main benefit is that they can offer you insurance at a competitive price, regardless of your medical history. 

If you have TPD insurance through your super the default cover, automatic acceptance limits and pricing may change over time. This occurs when your trustee re-tenders the insurance agreement or the agreement is renegotiated between the trustee and the insurer. 

How Does Applying For TPD Insurance Work?

When making a TPD claim, only the policy that you had at the time of the incident or illness applies. This means your TPD claim will be made with the insurer you held at the time of incident or illness, even if you have since changed insurers or stopped your insurance altogether. 

When claiming TPD insurance, consumers are often vulnerable. Many consumers are;

  • suffering from physical impairment and chronic pain:
  • supporting family on a reduced income;
  • lacking funds due to medical costs, household bills and legal fees;
  • attempting to return to work without success;
  • unaware that they are eligible to make a claim; and
  • reluctant to accept the permanence of their disability.

Once a consumer overcomes their vulnerability and attempts to make a claim, they are met with hurdles by their insurer. These hurdles include:

  • onerous claim forms and processes to lodge their claim;
  • intrusive surveillance;
  • several requests for information;
  • long delays;
  • requirements to see multiple specialists; and
  • Poor communication practices.

This difficult process has caused numerous claims withdrawals due to:

  • frustration, embarrassment or discomfort;
  • lack of funds to pursue their claim;
  • threatening behaviour or allegations of fraud; and
  • stress that affects mental health.

Because of TPD insurers poor practices, over 50% of disputes about policy definitions are for TPD products and pre-existing conditions. This damages the intrinsic value of insurance, which lies in your ability to make a successful claim when an insured event occurs. 

Fortunately, Splatt Lawyers have successfully settled 99% of our clients’ cases without ever needing to go to court. We understand the distressing situation that you are in and believe you deserve fair treatment. For this reason, we provide a no-win, no-fee service to ensure you are treated properly. Give us a call today on 1800 700 125.

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