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Differences in TPD definitions effect how insurers pay out claims

 


Differences in TPD definitions can affect how insurers pay out claims

TPD insurance, either inside or outside superannuation, will have definitions which are used to determine if your TPD claim is successful. Although there are general similarities in definitions across funds, there are also differences that can have an impact on how your insurance benefits will be paid.

Work based TPD definition

Most superannuation based and other (non-super based) TPD definitions are similar. For superannuation based super funds the definitions are usually along the lines of:

  1. you cease work due to illness or injury;
  2. you do not work for either three or six months; and
  3. at the conclusion of that three or six month period, you are unlikely (or sometimes unable) to ever return to work in any occupation that you are reasonably suited to by education, training or experience.

This is a fairly standard “work-based TPD definition”.

However, sometimes TPD definitions have very different requirements and pay insurance benefits in significantly different ways.

Non-superannuation based definitions (for TPD insurance outside your super)

Usually stand-alone or non-superannuation based TPD definitions are substantially the same as the above “work-based TPD definition”. These are usually called an “any occupation” TPD definition.

However, sometimes TPD insurance benefits which are held outside of superannuation can include an “own occupation” TPD definition. As the name suggests, such TPD insurance policies require that you cease work and are permanently unable to return to your own occupation.

Under own occupation TPD definitions, disputes can sometimes arise about what your own occupation is. Usually there is guidance provided in the policy definitions which helps. For example, it might be the occupation you are doing when you applied for the policy or the occupation that you were doing in the 12 months (or some other period) leading up to ceasing work.

Super-based TPD definitions

Usually, the definition which applies to insurance held within your super is similar to the “work-based TPD definition” with some minor variation. However, some other superannuation based TPD insurance definitions are very different.

Funds which pay TPD benefits differently to the standard definition

SunSuper has a TPD definition which is called TPD Assist which pays a TPD benefit in six instalments over five years provided you can continue to demonstrate that you are totally and permanently disabled, as defined, or you suffer from a specific illness which causes you work incapacity, namely:

  • Primary Pulmonary Hypertension;
  • Major Head Trauma;
  • Multiple Sclerosis (MS);
  • Muscular Dystrophy;
  • Dementia and Alzheimer’s Disease;
  • Parkinson’s Disease;
  • Chronic Lung Disease;
  • Cardiomyopathy; and
  • Paraplegia (including Quadriplegia, Hemiplegia and Tetraplegia)

Other funds that provide different types of TPD definitions to some members are Catholic Super & Spirit Super. Both of these super funds currently have TPD insurance arrangements for some of their members which are (in summary):

  1. 60% or 80% of the applicable benefit is paid if the person satisfies a TPD definition which is very similar to “work-based TPD definition” set out above.
  2. To be paid the remaining 40% or 20% of the applicable TPD benefit, you must demonstrate that you are unable to do a number of “everyday work activities”.

What are considered “everyday work activities” under some TPD definitions?

"Everyday work activities” are extremely prescriptive and relate to physical and other activities which are sometimes associated with work including, for example:

  • walking more than 200m on level ground;
  • getting in and out of chairs;
  • communicating (speaking or hearing) without assistance;
  • vision thresholds
  • bending;
  • kneeling or squatting; and/or
  • carrying and lifting restrictions (to name a few).

Claims against super funds that have percentage-based payments based on standard TPD definitions, with additional payments determined by your capacity to do “everyday work activities”, can be very complicated. Detailed medical evidence is required to specifically address the “everyday work activities” and even slight variations from the relevant definition can result in rejections of the claim or reductions in the benefits paid.

Fortunately, if you suffer from certain illnesses (and these illnesses cause you to be unlikely or unable to work), you may not be subject to the above restrictions. Those illnesses can include:

  • Parkinson’s disease;
  • Dementia;
  • Arthritis – all forms including osteoarthritis, gout etc;
  • Osteoporosis;
  • Motor neurone disease (MND);
  • Multiple sclerosis (MS); and
  • muscular dystrophy.

Get help

We have helped many people claim benefits which are subject to “everyday work activity” restrictions and have also won cases where the claim was initially rejected. If you have a claim against MTAA Super, Catholic Super or any other fund that is seeking to assess your claim under a non-standard definition of TPD, we recommend that you get in touch for some free advice.

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Brisbane: 07 3013 4300

Anywhere else in Australia:  03 9448 8048

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