Total and permanent disability (TPD) insurance is designed to provide financial support to people who have suffered life-changing injuries or illnesses and are unable to return to work.
But there are many examples of where someone may be deemed totally and permanently disabled, yet they later rejoin the workforce.
For example, new medications, therapies and rehabilitation techniques could alleviate symptoms of physical and mental illnesses. Someone could also retrain in a different profession that doesn’t have the same demands as their previous job.
So what happens if you’ve previously received a TPD lump sum payment from your superannuation fund or insurer, but you go back to being employed at a later date? First, let’s see how frequently this issue occurs.
How many TPD claimants return to work?
A SunSuper survey of TPD recipients in 2015 found that 36 per cent of successful claimants were able to return to work after recovering from a disability.
Investment Magazine published the firm’s data, which was based on 330 people aged between 41 and 60 years old, all of whom had received a settlement within the last five years.
The figures confirmed 19 per cent of respondents had started part-time work, while 3 per cent were back in full-time employment. A further 14 per cent were looking for a job.
Following the survey, SunSuper adapted its TPD offerings so that some claimants stopped receiving lump sums and were instead given payments over a six-year period.
These policyholders are now reassessed every year to gauge their level of disability and rehabilitation needs.
Will I have to pay my settlement back?
Currently, if you have already received a lump sum payment from a TPD claim, you can often return to work at a later date without repaying back the money.
When a compensation matter is settled, both parties sign a deed of release that finalises the claim and resolves the matter. This should prevent an insurer from trying to seek reimbursement for a previously paid claim, unless evidence of fraud comes to light.
However, every TPD policy is different and you should contact a superannuation disputes lawyer to confirm how your settlement would be affected if you later recover from your injuries or illness.
There is also a possibility that other insurers will follow in SunSuper’s footsteps and begin implementing structured payouts for TPD claimants, which could halt benefits for those who re-enter the workforce.