How to Claim Total and Permanent Disablement Insurance

Published: February 14, 2019

When you rely on your income to pay the bills and support your family, you probably require some form of protection against the possibility that you can't work because sickness or injury has left you totally and permanently disabled.

TPD insurance pays out a lump sum benefit in the event of a successful total and permanent disablement claim. However, whether your TPD claim will be successful or not depends on various factors, including the TPD definition that applies to your cover and whether your policy is held inside or outside your superannuation fund.

Read this article to gain clarity on what exactly TPD covers, the steps you must follow when submitting a claim and whether you’ll have to repay the benefit if you are lucky enough to one day return to work.

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What is a TPD claim?

TPD insurance generally pays you a once-off lump sum amount when an accident or illness results in you becoming totally and permanently disabled to such an extent that you cannot perform your Own or Any occupation for at least 3 to 6 months, depending on your insurer and the TPD definition of your policy.

Important: Please consult your policy documents and Product Disclosure Statement (PDS) regarding how your insurer defines total and permanent disablement. Also, be sure to review the exclusions and eligibility clauses.

What is considered total and permanent disablement?

You are generally considered totally and permanently disabled because when a medical practitioner is convinced that the accident or sickness has left you incapacitated to such an extent that it's very unlikely that you'll ever work again, as per your TPD definition: Own or Any occupation, Home duties or Modified TPD.

OR

you are considered totally and permanently disabled when you suffer the total and irrecoverable loss of:

  • Use of both your limbs, or
  • Sight in both eyes, or
  • Use of one limb and the sight in one eye.

TPD Definitions

Your TPD definition will generally determine whether a TPD claim might be valid or not. Depending on your insurer, the following definitions could be available:

Own occupation

Generally, a benefit will be paid if you become totally and permanently disabled and can no longer work in your specific/current profession, because of an illness or injury.

Any occupation

A successful TPD claim is usually defined as total and permanent disablement because of sickness or accident leaving you unable to work in Any occupation for which you are reasonably suited to by education, experience or training.

Home duties

An illness or injury has left you totally and permanently disabled and thus incapable of performing all your regular domestic duties, such as driving a car, shopping for food and cooking meals, cleaning the house, doing the laundry or caring for your dependent children.

Modified TPD

The accident or sickness has led to your total and permanent disablement, and you can no longer perform least 2 of the 5 Activities of Daily Living, including Eating, toileting, bathing, dressing and moving in an out of a wheelchair or bed without assistance from another person.

How to claim TPD insurance in 5 steps

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Step 1. Contact your insurer

If you think you might be eligible for a claim call your insurer's claims department as soon as possible and request that they send you the necessary claim forms. This is also when they will usually explain the whole claims process to you.

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Step 2. Review your policy documents and claim forms

Your product disclosure statement (PDS) and insurance documents should clearly state which criteria regarding your TPD definition you need to meet for a claim to be valid.

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Step 3: Wait for 3 to 6 months

This waiting period will differ from insurer to insurer. During this time, you might have to follow and actively participate in any recommended course of treatment and rehabilitation. Your medical examiner will then generally have to provide a certificate stating that you are totally and permanently disabled.

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Step 4. Go to a medical practitioner

To lodge a successful TPD claim, you need meet the TPD definition as per your policy terms and conditions to show evidence that because of an illness or injury you are unable to continue working. The insurer may request a second medical opinion, this is usually called an Independent Medical Examination (IME).

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Step 5. Complete and submit the claim forms

Include all the relevant documents and medical information the insurer requested.

When purchasing a policy through us and becoming a client, you’ll have access to our claim support service that will help you process your insurance claims for maximum efficiency.

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How much money do you get?

If you meet the insurer's definition of TPD, you will typically get a lump sum pay-out equal to the amount of cover you're insured for. Review your insurance documentation for the exact amount. However, if you've only suffered partial and permanent disability, for example, loss of one arm, one leg or sight in one eye, the insurer might pay you the lesser of 25% of your total sum insured or a specific amount.

Claiming TPD standalone vs combined

You can usually buy TPD insurance as a standalone option or in combination with your life insurance policy. When claiming on a stand-alone policy, the benefit you'll receive will usually not affect the benefits you have with different cover types.

When claiming on a combined TPD and life insurance policy, your total amount of coverage will generally reduce by the TPD lump sum paid. However, this option is usually more affordable than a stand-alone plan.

If you have a combined life and TPD plan, you may also want to consider adding a TPD buy-back benefit or Double TPD benefit, which you can generally add for an extra fee, depending on your insurer.

Are TPD claims tax-free?

If you have a TPD policy outside of super, then your lump sum benefit will usually be tax-free as it is not considered taxable income. However, if your plan was purchased through your superannuation fund and you need the payout before your preservation age, a percentage of your benefit might be taxed.

Take note: You might want to seek taxation advise from your accountant or a tax specialist as we are not taxation consultants.

How long does a TPD claim take?

The entire claims process usually takes a number of months, especially with all the documentation required proving that you are unable ever to work again. Generally, you’ll need to be absent from work for at least 3 to 6 months, depending on your insurer, before you can lodge a claim. The amount of time the whole claims process takes, usually depends on:

  • The speed at which you've submitted your completed claim forms.
  • How fast you send them all the relevant supporting medical information regarding your total and permanent disablement.
  • The insurer’s claims process, which is different from insurer to insurer.

Can you return to work after a TPD claim?

If a TPD claim was paid and in the very rare event you were to recover, you generally can return to work. Usually, you will not have to pay back the benefit amount received, as long as you fully complied with your duty of disclosure when you applied for the policy. However, it’s best to first consult with a legal professional regarding such an instance.

Important: If your total a disablement isn’t permanent/stable, a TPD claim will generally not be paid.

Claiming TPD inside super

When holding a TPD insurance policy through your super fund, the claims process may take longer because there's usually an additional step you'll need to comply with. First, you need to meet the insurer's definition of a successful claim; then the lump sum will generally be paid to your fund, where the trustee will then assess whether your total and permanent disablement definition meet the condition of release under the SIS legislation.

Frequently asked questions and answers

Can you claim on multiple TPD policies?

Generally, you might be able to claim total and permanent disablement from more than one policy, but it all depends on your insurer, the cover amount (you can’t be better off disabled, than you were before the accident or sickness) and the TPD definition you have, as well as whether it's inside or outside of superannuation.

Take note: When taking out more than one policy, you must disclose to the life insurance company that you have coverage with another insurer, as well as the amount of cover you have.

Can you claim on both income protection and TPD?

Yes, if you are unable to work due to an accident or illness and are totally and permanently disabled, you could claim on both income protection insurance and TPD insurance. However, it’s best to consult your policy documents as the terms and conditions may change from one insurer to another.

Will my death benefit still payout after I’ve received a TPD claim?

If you have a policy that combines life insurance with TPD cover and you make a TPD claim, then your overall cover amount will usually be reduced by the lump sum benefit paid out. The remaining life insurance amount will then generally be paid to your nominated beneficiaries when you die.

However, when you have a combined policy, with your TPD cover amount the same level as your life insurance cover amount, you’re remaining lump sum will be zero when a TPD claim is paid.

Can you claim TPD for mental illness?

Generally, you can claim TPD for depression and other mental illnesses on a fully underwritten policy when you meet the insurer’s definition of an insurable event and are disabled to such an extent that you can’ work for longer than your waiting period.

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