In short, yes. You can usually make multiple total and permanent disability (“TPD”) claims for the same injury or illness, across multiple super funds where you hold insurance benefits.
TPD insurance claims pay an agreed amount as a lump sum payment
TPD insurance benefits are different to insurance benefits paid under most other insurance policies because the benefit that you get paid if you satisfy the policy requirement, is an agreed amount. This means that to be paid a TPD benefit, you do not have to show that you have suffered any quantifiable financial loss; only that you satisfy the policy terms of being unable to work (or similar). If you satisfy this requirement you are paid a lump sum agreed amount.
Because TPD policies pay an agreed lump sum amount which is not worked out based on your financial loss, you can usually claim more than one TPD benefit for the same injury or illness and this is not “double-dipping”.
Income protection claims pay period payments (usually monthly)
Income protection or salary continuance insurance policies are different. These policies pay you a benefit which is usually 75% or 80% of your monthly earnings before you got sick or injured (your pre-disability earnings). This is paid for each month that you can’t work during the benefit payment period (i.e. two years, five years or until age 65).
These policies are indemnity policies, which means they will only pay you a benefit calculated based on your loss.
For this reason, you can usually not claim on two policies if it means you end up being paid more in insurance benefits each month then you used to earn. In other words, you are not allowed to “double-dip”.
Tip: If you have multiple superannuation funds, check the insurance policies in them. If you have income protection in more than one fund, it may be worthwhile terminating multiple income protection policies and only retaining the most appropriate one for your needs. You should seek legal advice before doing this, to ensure you are not losing any benefits you may potentially be able to make a claim on.
Exceptions to the rules
As with all rules, there are some exceptions to the rule that you can claim more than one TPD benefit. Some insurance policies provided through superannuation do not allow a TPD payment to be made if you have already claimed and been paid a TPD benefit previously. At other times, this restriction is made when you become a member of the super fund. For example, the fund may stipulate that you are not allowed to have insurance for TPD For this reason, we recommend that you seek advice before making any claims.
Changes to TPD insurance in super
Recent legislation requires superannuation funds to stop providing insurance on accounts that are inactive (which means that they haven’t had a contribution for more than 16 months).
Those changes will reduce the number of people who have a second superannuation account with insurance in it. But you can get around this limitation and maintain TPD insurance on multiple accounts by contacting your super funds and electing (opting-in) to keep the cover going on these inactive accounts.
Also, the rules about when your insurance cover can be stopped by your superannuation fund are complicated. Very briefly, before cancelling your insurance cover, your superannuation fund must contact you in writing (at least) to tell you that the cover is stopping. If you are told you don’t have insurance cover, we still recommend that you seek advice to make sure the rules have been properly applied to you.
Many people have more than one superannuation account from having worked various jobs over a number of years. If you are one of those people and you cease work due to injury or illness, it’s possible you will be covered under more than one TPD insurance policy.
If you are covered under more than one TPD insurance policy, you have probably been paying insurance premiums on the policy for many years. Therefore, before you make any claim for any TPD benefit, you should always check to see if you have other superannuation accounts.
If you have TPD cover under multiple accounts, you should check those accounts to make sure that you are allowed to claim multiple TPD benefits.
Making these checks and getting advice at this early stage, particularly about the order in which you should lodge your claims, might ensure that your right to claim multiple benefits is protected and you get the full benefit of the premiums you have been paying for TPD insurance over many years.
If you have suffered an illness or injury which is preventing you from working, you may be able to lodge a TPD claim with multiple funds. If you’re unsure about whether or not you have insurance cover or whether you can make more than one claim, do not hesitate to get in touch with today’s blog writer, Tom Cobban, for some free advice.
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