GMP settles 2 TPD claims for a client post work injury

You can purchase TPD insurance as a standalone product from insurers, although there’s a chance you may already be receiving total or partial coverage under other policies.

There are various ways that you may be entitled to disability benefits, including through:

• A superannuation policy;
• Life insurance;
• Income protection cover;
• Mortgage protection or loan protection insurance;
• Employment disability and/or trauma cover; and
• Sickness or accident policies.

However, you may not know how much you are eligible to receive and what criteria you must meet. Check the wording of your policies closely and contact a personal disability claims lawyer for information if you want further clarification.

Many people have access to TPD cover through their superannuation policy, although others may choose a standalone product from an insurer if they have tailored needs. Payouts are used to cover past and future income losses, medical bills, care and rehabilitation needs, out-of-pocket expenses and other costs.

However, policyholders must meet certain criteria to receive payments, which means there is always a chance the insurer or super fund refuses to approve the claim. But how often does this happen in Australia?

TPD claims rejected more than any other life insurance

In 2016, a comprehensive ASIC report into the life insurance industry examined the decline rates of four types of cover:

• Life (cover for death).
• TPD.
• Trauma.
• Income Protection.

Overall, nine out of 10 life insurance claims are paid in the first instance, but the figures for TPD cover were less encouraging.

In fact, disability insurance was the least likely of the four products to result in compensation, with 16 per cent of claims rejected. Some insurers had particularly high decline rates; ASIC found three companies turned down 37, 25 and 24 per cent of claims, respectively.

Fewer than half of funds make full or partial payments on between 71 and 90 per cent of claims, according to SuperRatings. The research, published in the Australian Financial Review, also showed nearly one in ten successful policyholders receives less than 60 per cent of the amount claimed.

Fortunately, compensation is typically available for TPD sufferers through their superannuation fund or separate insurance policies. But what if you have TPD protection under more than one type of policy? Can you make multiple claims?

You’ll be happy to learn the answer is often ‘yes’. However, there are some factors to consider before pursuing claims.

TPD stands for Total and Permanent Disability, and is usually attached to life insurance provided by your superannuation fund. It delivers a lump-sum payout if you have a medical diagnosis indicating that your life has been irrevocably changed and you will most likely never be able to work again.