A letter declining a total and permanent disability claim reads like a final answer. It is not. It is a decision by an insurer and, for cover held through superannuation, a decision the fund's trustee has accepted. Both can be asked to look at it again, and if they will not change it, an independent body and the courts can. This guide sets out the steps in order.

Key points

  • Ask for the reasons for the decline and the documents the insurer relied on before you do anything else.
  • Complain to the fund or insurer first. A superannuation trustee must respond within 45 calendar days, and most other financial firms within 30.
  • If that does not resolve it, a complaint to the Australian Financial Complaints Authority (AFCA) is free. AFCA's time limits for TPD complaints are strict, and some cannot be extended.

Why claims are declined

Most declines turn on one of four things: the medical evidence describes a diagnosis but not what you can and cannot do at work; the insurer says you could retrain for a different occupation; the insurer says the cover was not in force, had lapsed or excluded the condition; or the claim was assessed against the wrong definition. The decline letter should say which, and the response to each is different. The question is always whether the evidence meets the policy's own definition of total and permanent disability, not whether you are unwell.

Step 1: get the reasons and the file

The Life Insurance Code of Practice requires the insurers that subscribe to it to give reasons for a decline in writing and to tell you how to complain. You can ask for the information the insurer relied on, including treating doctors' reports and any independent medical examination it arranged. Read the policy's disability definition alongside the reasons, and note the date on the decline letter: the time limits below run from decisions like this one.

Step 2: internal review

For cover held through super, complain to the fund's trustee; for a policy you hold directly, complain to the insurer. Under ASIC's Regulatory Guide 271, a superannuation trustee must give a written response within 45 calendar days, and most other financial firms within 30 calendar days, unless a narrow exception applies. This is the place to put new evidence: a report from your treating specialist that addresses the policy definition in its own terms, an occupational or vocational assessment, and your full work history.

Step 3: a complaint to AFCA

If the internal response does not resolve the complaint, or no response arrives in time, you can complain to the Australian Financial Complaints Authority. AFCA is free for consumers, independent of the fund and the insurer, and can look at the merits of the decision. AFCA's rules set time limits for complaints about TPD decisions that depend on when you stopped work and when the decision was made, and AFCA cannot extend some of them. Check the current AFCA Rules, or get advice, as soon as a claim is declined.

Step 4: court

Some disputes go to court rather than to AFCA. Court proceedings carry a risk of costs and are subject to limitation periods under the Limitation of Actions Act 1974 (Qld), so they need advice before they start.

Income protection and other cover

The same steps apply when an income protection, death or terminal illness claim is declined, or when payments you were receiving are stopped. A decline on mental health grounds follows the same path; the evidence that matters is set out in our guide to TPD claims for mental health conditions.

Frequently asked questions

Can I challenge a declined TPD claim? Yes. Ask for the reasons and the documents relied on, make a complaint to the fund or insurer, and if that does not resolve it, complain to AFCA. Some disputes go to court.

Does it cost anything to complain to AFCA? No. AFCA is free for consumers.

How long does the fund or insurer have to respond to my complaint? Under ASIC's Regulatory Guide 271, up to 45 calendar days for a superannuation trustee and 30 calendar days for most other financial firms, unless a narrow exception applies.

Sources

  • Australian Securities and Investments Commission, Regulatory Guide 271: Internal dispute resolution — asic.gov.au
  • Australian Financial Complaints Authority, AFCA Rules (time limits for superannuation and insurance complaints) — afca.org.au
  • Financial Services Council, Life Insurance Code of Practice — fsc.org.au
  • Limitation of Actions Act 1974 (Qld) — legislation.qld.gov.au