What Does TPD Insurance Cover?

TPD stands for Total and Permanent Disability. It's a type of insurance designed to provide a lump-sum payment if you become so severely disabled that you're unable to ever work again. Many Australians have TPD insurance attached to their superannuation fund, often by default.

How Does TPD Insurance Work with Superannuation?

When you join a super fund, you might automatically be enrolled in default TPD coverage (along with other forms of insurance like life insurance). These default policies are often affordable, but it's crucial to verify the coverage amounts, which can often be very low. In the event you are injured, lawyers can assist with navigating the specific definitions. These vary from policy to policy and you must meet in order to be eligible for a lump sum payment.

What Do TPD Policies Cover?

If you are injured or ill, TPD Insurance pays you a lump sum in the event you are unlikely to ever return to work again due to your injury or illness. Every TPD insurance policy is different, so it is important to retain lawyers to review the clauses in the contract that are applicable to your claim. 

If you meet the eligibility requirements, TPD insurance can offer a lump sum payment designed to help you with costs such as:

• Medical and rehabilitation expenses: Helping you pay for immediate and ongoing medical treatments or therapies aimed at recovery.
• Debt payment: Covering outstanding debts like mortgages, credit cards, or personal loans.
• Lifestyle adjustments: Assisting with home or vehicle modifications required due to your disability.
• Income replacement: To a degree, this insurance can replace lost earnings you would usually be making for yourself and your family (however, this is a lump sum payment only rather than weekly compensation payments as you could receive through a WorkCover claim).

Note: While TPD cover is designed to help you with these costs in the event you are totally and permanently disabled and unable to return to work, the amount you receive will be a set lump sum amount determined by your policy. The default lump sum varies by Superfund and often by your age. Some funds, such as Australian Retirement Trust, have “opt-in” white collar coverage This coverage provides a 50% additional payout at no extra cost, and most funds provide the option to pay more to increase your coverage.

Typical Criteria for Claiming TPD Benefits

While insurer definitions vary, your eligibility to make a claim will depend on the requirements in your specific policy, which commonly include: 

• Severity of Disability: The definition to meet the test of being “totally and permanently disabled varies from policy to policy. However, you'll need strong medical evidence proving that your injury or illness permanently inhibits your ability to work. 
• Employment Status: Some policies specify you must be employed at the time of your disability or within a particular time frame.
• Waiting Periods: Insurers sometimes impose a waiting period after your date of injury (to allow time for your injuries to recover as much as possible) before you can claim, often three to six months from the time you are unable to work.

Often, there are other exclusion and eligibility clauses within your policy that your insurance company will require you to provide evidence to prove before you are eligible for the lump sum payment. 

Types of TPD Insurance Cover

• Any Occupation TPD: The payout hinges on whether you're unable to work in any job for which you're reasonably qualified by your education, training, or experience. This is the most common default type of TPD policy, it's generally cheaper but can be harder to meet the conditions for a claim.
• Own Occupation TPD: You would likely qualify if you could no longer work in your usual profession or the work you were doing at the time of the disability. This is more expensive but provides greater protection.

Important Considerations

• Review Your Policy: Don't rely on default superannuation cover. Examine your TPD policy's fine print, assess if the coverage amount is adequate, and ensure the disability definition suits your circumstances.
• Premiums: Your TPD premiums are deducted from your super balance, so ensure the cost aligns with potential benefits.
• Financial Advice: It's wise to consult a financial advisor or insurance professional when seeking the most suitable TPD insurance, especially if you have unique occupational circumstances or health risks.
• Legal Advice: If you think you may be eligible for a TPD claim, then seeking legal advice is recommended. While you can make claims directly, proving eligibility can be difficult, which means the chances of a successful claim are far higher with an expert TPD lawyer. Smith’s Lawyers offer free initial advice so you can check your rights.