Millions of Australians will find it harder to claim for a Total and Permanent Disablement Injury

From 1 November, millions of Australians will find it harder to claim on their total and permanent disablement (TPD) cover after a new TPD definition was introduced by Australian Super, the countries largest industry super fund.

The change, which will apply if the date of disablement is on or after 1 November, sees the new definition include the following phrase:
no-claim

…or any job that you may reasonably become suited to with further education, training or experience….

The inclusion of the phrase ‘or any job that you may reasonably become suited to’ is particularly concerning says Russell Cain, CEO of life insurance comparison service ComparingExpert.com.au.

“I have been involved in the industry for almost 10 years and I have never seen a Total and Permanent Disablement definition which includes the wording ‘or any job that you may reasonably become suited to’,” Mr Cain said.

“My concern is that the insurer may try to see if you can potentially be retrained, re-educated or gain experience in another occupation before you meet the definition and be eligible for a claim – meaning many people will not receive a payment.”

“Also, as far as I can tell, no time limit has been set for this to happen – how long will it take for the insurer to realise the member cannot be re-trained, re-educated or gain experience before the definition is met and you qualify for the lump sum benefit?”

Other changes to the definition include a requirement that the member be employed at some point during the six months prior to disablement, compared to 12 months previously.

These changes come on the back of a 75% insurance premium increase for Australian Super, in March 2014, their second increase in nine months.

Mr Cain believes the changes could act as a ‘double blow’ to Australian Super members.

“The price increase and change to the definition will potentially hit up to two million members of Australian Super where it hurts the most – in the hip pocket – either through reduced retirement funds due to paying more for their insurance, or if they become totally and permanently disabled and find it more difficult to get paid.”

While acknowledging insurance through industry superannuation funds was important, Mr Cain said members of any super fund should not just accept price increases or changes to their policy.

“You should explore your options and see what else is out there – a ‘retail’ life insurance policy for example can be funded by your superannuation but includes better definitions and is guaranteed renewable – meaning the insurer cannot change your existing policy definitions to make the policy inferior,” Mr Cain said.

“However if you do decide to keep your cover with your industry super fund, make sure you understand what you are covered for and how much you are paying for it.”