Some of Australia’s largest and most recognisable superannuation funds have unilaterally altered the definition for Total and Permanent Disability (TPD) insurance over the last few years, to make it significantly more difficult for members to claim this benefit – a benefit for which they pay premiums from their own superannuation account.
Most superannuation funds provide their members with TPD insurance they can access if, for any medical reason, they are unable to continue working in a job for which they have education training and experience.
How has the TPD definition changed?
The new definition of TPD for many Australians will now require an assessment not only of whether their medical condition prevents them working in a job within their education, training and experience levels, but also whether they are able to reasonably retrain or reskill despite their injury or illness.
If the Insurer forms the view that a person with an illness or personal injury can’t do their old job, but can retrain for another job with which their injury or illness does not interfere, then the TPD benefit will not be payable. This is despite a person being unable to return to the type of work that they have been doing in the past, often for many years, and sometimes even exclusively.
So why are the changes to the TPD definition a problem?
Melissa O’Neill, National Practice Leader of Disability & Super, has more than 20 years of claims and litigation experience in this space and says she is extremely concerned about how the change will impact everyday Australians. Melissa expresses concerns that many Australians will not have coverage for when they need it most.
“These changes will make it significantly more difficult for injured Australians to access insurance benefits when they are most in need,” Melissa said.
To expect workers to reskill into a role completely at odds with their interests and skill set takes away a person’s right to choose their own career path.
In recent years, insurance companies have likely seen a growth in claims as more and more people have become aware of their insurance benefits and rights. It appears that these companies were unprepared for this and are trying to find ways of declining legitimate claims in an attempt to protect their profit margins.
In my view, these are simply attempts by insurance companies to curb the TPD payouts being made through legitimate claims by using its corporate presence to bully the little guy."
Other issues with changing the TPD definition
1. The lack of clarity around when an assessment will be made of a worker’s ability to get alternative work.
“Will Insurers simply draw out the claims process in the hope that a claimant will eventually get a job, even if it takes 3, 4 or even 5 years, just so it does not have to pay? Such a claims process would mean the whole purpose of the insurance would be defunct.”
2. The new TPD definitions require workers to show they are so worse off that they simply cannot undertake any meaningful work at all.
- “I have no doubt that insurers will trot out the old line that anyone can get work as a telemarketer or as a delivery driver – because everyone who can use a phone, or has a driver’s licence is able to do this work," Melissa said. “We see that time and time again with Insurers knocking back claims for people who try to earn a bit of money through rideshare work, when that is the only income they can get to put food on the table and pay the power bill.”*
3. The changes increase the cost for a claimant to obtain the appropriate and necessary medical and occupational evidence to prove their case. In some instances this can cost a claimant in the vicinity of $5,000.
"I believe that some claimants will simply forego making a claim as it is all too hard and expensive, and I suspect this plays into the Insurer’s strategy to reduce their own claims costs."
Melissa says she is concerned about what choices had been given to superannuation fund members about the significant tightening up of the TPD definitions.
“I would be interested to see what notice these funds and insurers are giving to members about what the changes really mean, and whether this has allowed their members to really consider the type of insurance that they want and need," she said.
The way in which these type of changes are snuck past members is shameful. Members of all funds should be checking the terms and conditions of their insurance, and if not happy with the product, showing their displeasure by seeking advice and getting alternative insurance elsewhere."
Shine Lawyers – we’re here to help
Melissa’s team of expert Superannuation and Insurance Claims Lawyers have assisted countless clients to make a successful claim for their TPD benefits due to their experience and extensive knowledge of most policies across the industry. We can help you to understand what is required under your specific policy and run a claim on your behalf to get you the outcome you deserve. Contact us today for an obligation-free consultation.
Written by Shine Lawyers. Last modified: May 1, 2020.