Around 2011-2013 life insurance companies around Australia received a large spike in the number of TPD claims being made and many were very old claims. As a result of this, many insurers in recent years have changed and tightened their definitions of TPD to make claims harder to win. One very notable change is the introduction of re-training clauses.
What is a retraining clause in a TPD definition?
The normal definition of TPD requires that you prove that you can’t do your usual work or other work that is within your education, training and experience.
Many super funds and insurers have now introduced a “retraining clause” into TPD policies. This means that you have to prove that you can’t do your job, or another job within your education, training and experience, and you are unable to be retrained into a new job.
How do insurance companies assess claims with a retraining clause?
When insurance companies assess claims with a retraining clause, they often consider what further retraining you could be able to undertake. However, in our experience these assessments are often flawed because the insurer frequently fails to consider:
- the cost of undertaking the retraining course;
- whether the course is actually available to you;
- whether you would realistically be able to successfully undertake the course; and
- whether if you did succeed in completing the course, it would actually lead to you being able to re-enter the workforce.
All of the above factors and more are important considerations in retraining clauses. If you can’t afford to actually do the course, or if the course isn’t actually available to you where you are, then it provides no real help to you being able to return to work.
How many Australian Super funds now include a retraining clause?
At the time of writing this article, there are a number of prominent super funds that include a retraining clause in their definition of TPD. They include:
- Australian Super
- Statewide Super
- Vision Super
There are many super funds not listed above which also have retraining clauses in their definition.
The reality is that the definition of TPD changes (from fund to fund, policy to policy and over time) and it is important that you know which definition applies to you. Importantly, the definition that is relevant to your claim will be the definition which was applicable at the time that you stopped work, not necessarily what the current definition is.
If you’re unsure what definition is relevant to your claim, contact our office and we will investigate your super funds and insurance policies to ensure that you know your rights and get the benefits you’re entitled to.
What did the Royal Commission have to say about TPD definitions?
One of the recommendations of the Hayne Royal Commission was for Treasury to investigate whether to set standard definitions, terms and conditions for default MySuper group life insurance, including Total and Permanent Disability (TPD) insurance.
For more information on this, read our recent article ‘MySuper Insurance – TPD Standard Definition.’
If you’re currently going through a TPD claim and need to speak to someone, please call us for a free, no-obligation chat about your situation. You can also speak directly with today’s blog writer, superannuation and insurance lawyer Paul Watson.