TPD Claim Traps

Total and Permanent Disability (TPD) claimants in Australia often worry about the claims process and whether the insurance policy has a sneaky trick or loophole that favours the insurer and allows them to reject their claims. They also have concerns that the insurer might trick claimants into making mistakes in their TPD claims, which lets the insurer off the hook.

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You are right to be concerned

TPD claimants are not imagining things. They are right to be concerned because many insurers see it as their duty to reject claims, often investing more resources into reviewing claims due to a rise in TPD lodgements. This increased scrutiny can mean more detailed examinations of your medical records and employment history, potentially leading to longer processing times and more disputes.

Insurers Do Employ Tricks and Traps

The following tricks and traps will give you some idea of what to look out for when making a TPD claim for an insurance benefit from your superannuation fund or other insurers. There are no surefire guarantees that your claim for TPD in your superannuation fund or retail insurance policy will be successful and bring you a lump sum payment, but there are ways to help avoid falling for any tricks and traps. Understanding how TPD insurance works can be a good first step.

Common Tricks and Traps TPD Insurance Claimants Face

We first need to understand the TPD definitions (which can cover a range of conditions, see some of the most common TPD claims) and expunge the myth that total and permanent disability means you must have catastrophic disablement to make a successful claim. That is simply not the case, and insurers may try to make you feel that you just are not disabled enough. It’s about proving your incapacity to perform your previous work, or any work for which you have transferable skills, based on your specific circumstances.

However, many claimants receive poor advice, sometimes even from their super fund or insurer during initial calls, leaving them feeling they aren’t disabled enough to claim.

Don’t fall for that old chestnut.

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Mixing Up Important Dates and Work Status

Insurers often try to trick or trap claimants by scrutinising dates. For instance, the insurer might claim you were injured or became ill after you stopped working, arguing your claim is invalid because your injury or ill health wasn’t the reason for stopping work. They might contest your claim if you accepted a redundancy before lodging your TPD claim, suggesting the redundancy, not the disability, was the reason for work cessation. They also try to reject claims if you didn’t seek timely medical treatment when you stopped working, or if your condition was not yet diagnosed at that specific point.

Other crucial information includes:

Work Status at Disablement: Your work status when you became unable to work is crucial. To be assessed under a work-based TPD definition, you generally must have been working when your illness or injury occurred. If you weren’t working, a more stringent definition (like an Activities of Daily Living or ADL definition) might apply, making the claim harder.
Waiting Periods: Most policies include a waiting period, typically 3 to 6 months, during which you must demonstrate your inability to work. Claiming too early without solid proof of incapacitation for this period can lead to denial.

Superannuation funds have varying conditions within their policies. It’s crucial to understand these, or you can allow us to review them before making a claim. Seeking TPD claims advice can be invaluable here.

Again, don’t fall for these tactics. If you face such issues, consider seeking legal help from experienced TPD lawyers.

Insurance Doctors Versus Your Treating Doctor

Sometimes superannuation funds or medico-legal insurance doctors and your treating doctor may have different opinions about whether or not you can work again. The doctors employed by the superannuation fund or insurer often argue that a claimant can work, and treating doctors say the opposite.

The insurer usually takes the word of their medico-legal doctor that a claimant has seen once, and these doctors can easily get your details or circumstances wrong. A good lawyer can get the opinion of their own medico-legal experts and specialists so it’s not left up to a treating GP.

We also have access to GP’s who are experienced in TPD assessments.

Things you need to know to help make a successful TPD claim

When claiming TPD or making superannuation claims, you usually have to prove you are not able to work in the same occupation that you did before your disability caused you to stop working. If you have transferable skills, you must show that you could not use them in other employment. To claim TPD benefits, a major factor that determines the outcome of your claim is your level of disability that resulted from your accident/illness/incident. As a general rule, the TPD claims assessor will consider the following:

Can you return to the work you did before you were disabled?
Will you ever work in any kind of employment in the future?
Does your disability stem from the loss of a part of or a whole limb, your eyesight or other sense?

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Another thing to remember is that a Centrelink disability support pension is not affected by successful TPD claims from a superannuation fund. In other words, your TPD claim will NOT be impacted by your Centrelink benefits since the amount you win will be paid into your superannuation account initially. Superannuation funds are excluded from Centrelink means testing.

Specific Traps When Claiming TPD Through Superannuation

Claiming TPD through your superannuation fund comes with its own set of potential traps:

Tax Implications

Accessing your TPD benefit from superannuation is a withdrawal and may be subject to tax. The amount of tax depends on factors like your age, whether the money is taken as a lump sum or income stream, and the “tax-free” and “taxable” components of the super payout. Understanding if your TPD payout is considered taxable income is crucial for financial planning.

Mismatch With Super Conditions of Release

There can be a risk, especially with older policies or in Self-Managed Super Funds (SMSFs), where an event is claimable under the insurance policy, but you don’t meet a superannuation “condition of release.” This could mean your TPD benefit is paid but remains trapped in your super fund until you meet another condition, like retirement.

“Any Occupation” Definition is Standard

As mentioned, TPD claims through super are almost always assessed against an “any occupation” definition, which can be harder to meet than an “own occupation” definition sometimes found in retail TPD policies.

What if Your TPD Claim is Denied?

If your TPD claim is rejected by the insurer, don’t assume it’s the end of the road. Insurers don’t always get it right.

Understand the Reasons

The insurer must provide reasons for their decision. Review these carefully.

Internal Dispute Resolution

You can usually request an internal review of the decision by the insurer.

Complain to AFCA

If you’re unsatisfied with the internal review, you can lodge a complaint with the Australian Financial Complaints Authority (AFCA), a free and independent dispute resolution body.

Seek Legal Advice on Declined Claims

This is often the most effective step. If your claim has been declined, TPD specialist lawyers can assess the insurer’s decision, advise on the merits of challenging it, help gather further evidence, and represent you in disputes or legal proceedings. Knowing how long a TPD claim takes when it’s disputed can also help set expectations.

Frequently Asked Question

My insurer says their doctor's opinion overrules my own doctor's. What can I do?

This is a common tactic. Insurers often favour their medico-legal doctor’s assessment. However, these doctors may have only seen you once. You can strengthen your position by getting opinions from your own specialists and, if necessary, an independent medico-legal expert. Speaking with TPD claim specialists can help challenge unfair medical assessments.

I stopped working and then got diagnosed. Can the insurer use the timing of my diagnosis against me?

Insurers might try to argue that your condition wasn’t the reason you stopped work if it was diagnosed later, or if you didn’t seek medical treatment immediately upon ceasing work. It’s a tricky area. Documenting your symptoms and work difficulties even before a formal diagnosis is helpful. Understanding your policy’s specific terms around the date of disablement is key, and getting TPD claims advice is recommended.

The “any occupation” definition, common in TPD insurance via super, means you must be unable to perform any job reasonably suited to your education, training, or experience, not just your usual one. This is a higher bar than “own occupation.” Insurers can trap claimants by broadly interpreting what “any occupation” might include. Demonstrating why you cannot perform any such work, with strong medical and vocational evidence, is crucial.

Are TPD payouts taxed when claimed through superannuation?

Yes, TPD payouts from superannuation can be taxed. The amount of tax depends on your age, the components of your superannuation (tax-free vs taxable), and how you withdraw the funds. It’s important to get information on whether your TPD payout is considered taxable income to plan accordingly.

Get in touch

Let us know know about your requirements

Phone

1300 679 222

Email

info@tpdhelpline.com.au

TPD Helpline Australia can be contacted on 1300 679 222. Our helpline reps are well versed in all things related to TPD claims, injury compensation claims, health conditions, illnesses and injuries whether sustained at work or not. If there is an issue we can’t answer over the phone, we have access to a mountain of resources so that we can call you back within the day to provide answers.

Due to time differences across states, we recommend leaving a voicemail if your call is not answered. We promise to return your call within the day taking note of time differences. Our phone helpline is manned Monday to Friday, 8.30am – 5.00pm (AEST). Our Facebook social media page is manned 7 days a week and we respond to direct messages quickly. In fact, most of our enquiries come via Facebook private chat.