Total and Permanent Disability (TPD) Insurance & Superannuation

• TPD insurance through superannuation is affordable and easy to obtain, without any medicals.
• You may already be covered through your employer’s super with default cover.
• Cover may not be sufficient for the policyholder’s individual needs.

Total and permanent disability (TPD) insurance is often mistaken as a cover for injuries caused by accidents, although this is not necessarily always the case. TPD insurance providers a lump sum benefit payment in the event that you have a disability that is deemed total and permanent, either as a result of an injury or illness.

Can You Hold TPD Insurance within Superannuation?

Similar to life cover, total and permanent disability insurance can also be held inside superannuation. However, there are certain conditions you need to be aware of if you are considering funding your TPD cover through super, which differ from that of retail TPD cover.

These conditions include:

• Eligibility to contribute to your super
• Tax treatment on tpd premiums and benefit payment
• Access to TPD benefit through super

Superannuation TPD Claims

Some superannuation funds will now offer a default level of TPD cover for members. Members can check if there is TPD cover in their super fund by contacting a fund representative and requesting a copy of their online statements.

Payment of Total and Permanent Disability Claims in Superannuation

In order to receive a TPD benefit from their super fund a member must;

1. Satisfy all conditions of the fund insurance contract.
2. Satisfy the permanent incapacity definition as stated under super law.
3. Satisfy “disability super benefit” definition stipulated under Australian tax law. This will allow the policyholder to claim an additional tax-free portion on the lump sum benefit.
4. Fund trustee must be satisfied that the insured has met the conditions of the policy and is unable to engage in employment that they have are qualified in by education, training or experience.

TPD Claims Process: Inside Superannuation

1. Contact Super Fund: Policyholder to contact their super fund after which they will be provided with necessary claim documentation. They will also need to provide additional documentation. This might include;
   1. Identification – Birth Certificate, Drivers Licence, Passport
   1. Existing medical reports
   1. Medical evidence to support claim
2. Submit Claim: Claimant to sign their claim statement and attach to all necessary documentation. This will then be provided to their Case Manager. A Case Manager provides assistance throughout the claim process, ensuring all of the necessary documentation is received.
3. Organisation of Claim by Case Manager: Case Manager will assess policyholders claim to determine whether they are eligible to receive a TPD benefit. They will usually contact the claimant’s employer to receive a written statement as to why they ceased work.
4. Claim is Assessed By Insurer: An insurance provider will assess the documentation submitted. In some cases further evidence may be require including;
   1. Doctors reports
   1. Further medical examination with an independent specialist
   1. Further information from the claimant’s employer
   1. Further information from the claimant
5. Claim is Assessed by Insurer: The insurance provider will assess the claim and determine if it is;
   1. Accepted: Claimant contacted with claim payment options.
   1. Declined: Claim is deferred while the provider assesses full extent of disability and its permanency. Claim is denied as the insurer has deemed the claimant has not satisfied the conditions of the policy.
   1. Deferred: Claim is deferred while the provider assesses full extent of disability and its permanency.

If the claim is deferred or declined it will be referred to the fund trustee who will review the decision made by the insurance provider on the claimant’s behalf.

Payment of TPD Claims in Multiple Super Funds

It is not uncommon for people to have TPD insurance that has accumulated in multiple funds that have been opened by different employers. It is possible in some circumstances for the policyholder to claim multiple benefits at the same time. However, it is important that the claimant carefully checks the conditions of each fund before submitting multiple claims at the same time.