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Activities of Daily Living creeping into TPD insurance policy definitions


Activities of Daily Living and TPD claims

In the last 5 years, there is a worrying trend creeping into Total and Permanent Disability (TPD) insurance benefits of imposing a much harsher ‘Activities of Daily Living’ (ADL) test.

ADLs means you can’t do 2 or more basic tasks such as bathing, dressing, feeding, toileting or getting in and out of bed.

It is much harder to qualify than a standard TPD definition which is the incapacity to do your normal job or other suitable work given your education, training or experience.

A recent ASIC report shines a light on this problem and the need for change.

Read our Media Release for the full details.

Media Release

17 October 2019

ASIC TPD report -no more ADL’s.

We welcome the ASIC report recommendations regarding Activities of Daily Living (ADLs).

We have noticed ADLs creeping into TPD definitions in stand-alone insurance, and insurance through superannuation for the last five years.

Whereas 88% of TPD claims with standard definitions are accepted, only a tiny fraction of clients would satisfy the onerous ADL requirements.

To be eligible for a standard TPD definition, a person needs to be permanently unfit to do their usual job or any other suitable work given their education, training or experience, perhaps with a retraining clause added.

In contrast, to satisfy an ADL definition, a person must be unable to do two or more daily living activities such as feeding, bathing, dressing, toileting, walking and transferring from bed.

In fact, the 40% figure for accepted ADL claims in the ASIC report is only half the story. In our experience, many more people who would otherwise qualify for a standard TPD definition never bother to claim because they can still feed, clean, toilet will clothe themselves.

ADL definitions have no place in employment-related TPD insurance benefits, such as MySuper default cover.

We have been calling for ADLs to be removed from TPD products for three years now and said so in a submission to the Treasury inquiry into universal terms in insurance in July 2019.

The good news story out of the ASIC report is the high rate of acceptance of TPD claims generally and the reducing claim timeframes. It shows the TPD benefits are well targeted and value for money.

But the boil that needs to be lanced is ADL definitions. The ASIC report does this.

The report is a big step in the right direction.

Media Enquiries- John Berrill 0408 322 979

You can download the original Media Release "ASIC TPD report -no more ADL’s" here.

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