If an injury or illness has stopped you working, there is a fair chance you are insured for it and do not know. Superannuation funds add total and permanent disability (TPD) cover to most members' accounts automatically, and many add income protection and death cover too. The premiums come out of the account balance, which is why people forget the cover exists. A TPD claim does not depend on who was at fault, on where the injury happened, or on whether you have another claim running. It depends on the policy and the medical evidence.

Key points

  • TPD cover is a lump sum paid when injury or illness means you are unlikely to work again in a job suited to your education, training and experience.
  • You may hold cover in more than one fund, and each can pay; the first step in any claim is finding all of it.
  • A declined claim can be challenged through the fund's internal review, then a free complaint to AFCA, then court.

Finding the cover

Every fund you have belonged to may have carried cover, and cover from a job you left years ago may still be in force if the account was kept open. Start with your current fund's statement or member portal, then the ATO's online services, which list every super account in your name. Ask each fund for a copy of the insurance policy and the date cover started. A fund's rules on when cover lapses, typically when contributions stop for a period or the balance falls below a threshold, decide whether a claim can be made at all, so this is worth doing early.

What "totally and permanently disabled" means

Each policy has its own definition, and the definition, not your diagnosis, decides the claim. The common form is that, because of injury or illness, you have been unable to work for a waiting period (often three or six months) and are unlikely ever to return to work in any occupation for which you are reasonably suited by education, training or experience. Some policies for particular occupations use an "own occupation" test, which is easier to meet. Physical injuries, chronic illness, psychiatric conditions, neurological conditions and chronic pain can all qualify. What the insurer looks for is medical evidence that addresses the policy wording: not "he has a back injury" but "he cannot sit or stand for the periods any suitable job requires, and this is permanent".

How a claim is assessed

You lodge a claim with the fund, which passes it to its insurer. The insurer gathers your medical records, reports from treating doctors, employment history and often an independent medical examination, and may look at your tax and Centrelink records. The Life Insurance Code of Practice requires insurers to decide most claims within six months of receiving them and to tell you if it will take longer. If the insurer is minded to decline, it must give you the reasons and a chance to respond before it does. When the insurer accepts, the fund's trustee must also be satisfied before the benefit is released into your super account, from which it can be withdrawn under the permanent incapacity condition of release.

Income protection alongside it

Income protection pays a monthly benefit, usually a percentage of your pre-disability earnings, while you cannot work, and does not require the incapacity to be permanent. Where you hold both, the claims are run together, and evidence gathered for one supports the other. Some income protection policies offset other benefits you receive; check before assuming the two add up.

If the claim is declined

A decline is a decision, not a verdict. Most declines come down to medical evidence that describes a diagnosis rather than work capacity, an argument that you could retrain, or a dispute about whether cover was in force. Each can be answered. The path is the fund's internal dispute process, then a complaint to the Australian Financial Complaints Authority, which is free and can substitute its own decision, and, for larger or more complex claims, proceedings against the trustee or insurer. AFCA has time limits for complaints, generally measured from the fund's final decision, so get advice as soon as the decline letter arrives. Each step is set out in our guide to what to do when a TPD claim is declined.

TPD and your other claims

A TPD benefit can be claimed alongside a CTP, WorkCover or public liability claim arising from the same injury. It is not deducted from those claims, and they are not deducted from it, though income protection can interact with WorkCover weekly payments. Anyone whose injury has ended their working life should have all of their cover checked, whatever else is on foot.

Frequently asked questions

Do I have TPD insurance? Probably, if you have a super account that has received contributions. Check your fund statement or the ATO's list of your accounts, and ask each fund for the policy.

How long does a TPD claim take? Preparing a claim properly takes a few weeks; insurers are required by the Life Insurance Code to decide most claims within six months of lodgement.

Can I claim TPD if I was not injured at work or in an accident? Yes. TPD turns on your capacity to work, not on how the condition arose. Illness, including mental illness, qualifies under most policies.

Sources

  • Superannuation Industry (Supervision) Regulations 1994 (Cth), Schedule 1 (permanent incapacity condition of release) — legislation.gov.au
  • Life Insurance Code of Practice (Council of Australian Life Insurers), claims handling timeframes — cali.org.au
  • Australian Financial Complaints Authority, Superannuation complaints and time limits — afca.org.au
  • Moneysmart (ASIC), Total and permanent disability (TPD) insurance — moneysmart.gov.au
  • Australian Taxation Office, Early access to super: permanent incapacity — ato.gov.au