If you suffer a personal injury, such as a car accident or an accident at work, you may be eligible to claim compensation to cover lost earnings while you recover.
But if you suffer a more serious physical or mental illness or injury, you may never fully recover or return to work again. This type of permanent disability can be life changing.
If this occurs, you may be eligible for a lump sum payout to cover your lost earning capacity, medical needs and daily living expenses. This compensation can help you maintain a good quality of life and financial security if you can’t work again.
Total and permanent disability (TPD) insurance
TPD insurance covers you if you become totally and permanently disabled due to an illness or injury, and are unlikely to ever work in your role or another role you’re qualified to do.
Many people already have TPD insurance through their superannuation. The fund may call it a disability benefit or incapacity benefit.
You can also buy TPD insurance directly from an insurance company, a broker or a financial adviser. However, getting it through your super fund can cost less.
You can also buy TPD insurance with life cover. But be aware that , if you make a TPD claim, your life cover might be reduced depending on the lump sum amount paid.
What is a permanent disability?
Each insurer and super fund defines total and permanent disability in its own way, and has conditions under which they will pay a TPD benefit.
Generally, you don’t have to actually be permanently disabled to be eligible for a payout. You must be unable to work (for the time period stated in your insurance) and be unlikely to return to work.
Also the injury or illness doesn’t need to be related to a workplace incident. For example, you may suffer:
- a spinal injury that leaves you unable to do your physical job
- a chronic psychological illness that makes it impossible to work
- a terminal illness.
This includes a range of illnesses and physical injuries, including cancer, limb amputation, hearing loss, blindness, depression, post-traumatic stress disorder, stroke or other debilitating ailment.
Claiming compensation after a permanent disability
Every TPD insurance policy is different, so it’s essential to understand the terms and conditions. If the worst happens, you want to know that you’re eligible to make a claim.
Usually you’ll make a TPD insurance claim through your insurer or superannuation fund. First you need to meet the insurer’s or fund’s criteria for ‘total and permanent disability’.
You also need to be below retirement age, as TPD payouts are meant for people who haven’t yet retired from work. (If you have already retired, contact Main Lawyers to discuss your options.)
You will need to provide evidence to support your claim, including medical evidence from your doctor. Your legal professional can help you gather the required evidence for you.
Generally, the process for making a TPD claim involves:
- contacting your fund to see how many TPD policies you have (i.e. as you may have several super funds and, therefore, several TPD policies)
- checking that the cover was valid at the time of your injury or illness
- reviewing the criteria to ensure you’re eligible
- gathering the documentation you need to support your claim
- submitting an application for a TPD insurance claim.
We recommend engaging a TPD insurance lawyer with experience in this process to ensure a smooth process and the best possible outcome.
Factors influencing your TPD payout
There are a few hurdles to jump over to satisfy the requirements for a TPD insurance payout. The test is a strict one, and the insurer or fund will consider many factors when making a decision about a payout.
These factors include:
- their rules and conditions around TPD benefits
- your level of cover and super balance (and how long you’ve been with them)
- the impact of the injury or illness on your ability to do your job, including any ongoing issues you’ll have
- any reduced life expectancy and quality of life
- expenses you’ll have to pay as a result of your injury or illness, including treatment and rehabilitation
how much earning capacity you have lost and will continue to lose.
Timeframes for TPD claims
The process of applying for and receiving a TPD payout can be a long one, depending on the complexity of your case.
It can take weeks, or even months, to gather the evidence you need. Your lawyer can help you by contacting the companies, medical professionals, insurers and funds involved.
It can then take up to a year for your claim to be approved and to get your payout.
Some good news is that there’s no time limit for making a claim for a TPD payout. No matter how many years its been since you stopped working due to an injury or illness, you could still be eligible to claim.
In fact, you usually have to wait until the full extent of your injury or illness is clear, as it may take a while for the impact to be obvious.
Your TPD lump sum offer
If your claim is successful, you will be offered a lump sum payment. It’s vital to consider all your options before you agree to the settlement. You need to know whether the offer will meet your current and future financial needs and any impact on your tax obligations.
The tax implications of a lump sum offer can be different depending on whether it comes from an insurance company or your superannuation. For example, a superannuation TPD payout may be taxed as a superannuation withdrawal, while a payout from an insurer may be tax free.
The important thing is to get the right advice. Your TPD lawyer can help you with this.
Timeframes for TPD claims
At Main Lawyers, our legal professionals have years of experience with the TPD claims process. We can help:
- guide you through the claim process
- gather the evidence you need
- negotiate with insurance and superannuation companies for you
- make sure all the paperwork is filed correctly and on time
- advise on appeal options if your claim has been rejected.
Contact us today for a no-obligation discussion about your circumstances.