A serious illness or injury can be life-changing, leaving you without a way to earn an income, potentially for the rest of your life. Thankfully, a total and permanent disability (TPD) insurance claim can provide a lump sum payout if you can no longer work due to injury or illness.
Unfortunately, many TPD claims are declined in New South Wales because applicants don’t complete the process correctly. An experienced TPD claims lawyer can assist you, giving you the best chance of a successful outcome.
So what is TPD insurance and how can you prevent your claim being declined unnecessarily?
What is TPD insurance in NSW?
In NSW, a total and permanent disability insurance policy can protect you if you’re too sick or injured to return to work. It can cover you for lost income and super contributions.
This is more than just workers compensation, which aims to get you back to work as soon as possible. This insurance protects you if returning to work is unlikely.
For TPD insurance claims, the illness or injury doesn’t have to be work related. It could be the result of any accident, incident or other reason. Some common ones include:
- heart disease or cancer
- sports injury
- car accident injury
- brain injury
- chronic illness
- anxiety or depression
- post-traumatic stress disorder.
TPD insurance is usually paid as a lump sum rather than instalments. Most Australians already have this insurance through their superannuation fund or perhaps a life insurance policy. It’s worth checking now to see if you have it – before you need it.
The good news is that TPD insurance is completely separate from your superannuation balance, so it won’t impact your savings.
How TPD insurance works
There is strict criteria for a successful TPD claim in New South Wales. You need to provide evidence that you:
- can’t return to work in your usual job (and, for some policies, any other position you’re trained or qualified to do)
- had active TPD insurance cover when you became ill or injured.
Not all TPD insurance policies are the same. As noted above, some policies don’t require you to be unfit for all work to make a successful claim (just your own work), but others do. It depends on your individual policy.
Different policies also have different benefit amounts and disability thresholds. So the first step after finding out whether you have a policy is to read it and fully understand what you’re covered for.
A TPD payout isn’t considered taxable income, but you may have to pay a tax if you withdraw any of your TPD payout from your super as a lump sum.
Making a claim for a TPD payout is a long process. It can take 6 to 12 months to finalise, as the insurer and super fund both need to assess your claim. It’ll take even longer if they ultimately deny your claim.
So make sure you understand why your claim could be denied and how to avoid unnecessary delays.
Why TPD insurance claims are declined
Unfortunately, it’s common for insurers to reject superannuation TPD claims. These payouts can be in the tens or even hundreds of thousands of dollars (sometimes more), so insurers will look for any reason to avoid the payout.
The criteria for TPD insurance payouts can vary across policies and insurers, so you must meet the criteria in your individual policy. If you don’t, your claim will be rejected.
They might also decline your claim due to:
- missing or incomplete information or evidence
- disagreement about how the injury or illness will affect future work ability
- pre-existing conditions that may have contributed
- late claim lodgement
- an inactive insurance policy
- minimum waiting periods.
The insurer might also determine that you’re qualified or trained – and able – to work in a different role or industry.
However, an insurer’s decision to decline your claim might not be your fault. For example, they might:
- review your claim too quickly and incorrectly determine that you’re not eligible
- make a mistake in getting evidence from a doctor or an expert (e.g. engage the wrong expert).
So it’s always worth getting a second opinion if your TPD insurance claim is declined. Even if the decision is correct, there might be other avenues you can take to get compensation.
What to do if your TPD claim is declined
Here are some options if your claim is declined.
1. Request an internal review
You can ask the insurer to review your claim through their internal review or complaints process. There is no cost for this review.
Clearly state why you feel the decision was wrong and provide evidence to support those reasons.
The person handling the review will be different than the original decision-maker and might even sit in a different department.
2. Refer to the Australian Financial Complaints Authority
If the internal review is unsuccessful, you might lodge a complaint with the Australian Financial Complaint Authority (AFCA) – a ‘non-government ombudsman service providing free, fair and independent help with financial disputes’.
This dispute resolution process is usually fast and inexpensive. Again, there’s no application fee and no costs can be awarded against you.
3. Take your claim to court
If you’re unhappy with this outcome, you can start court proceedings against the insurer. However, this option can be expensive, time consuming and stressful, so you shouldn’t do it without legal assistance.
Getting legal help
If you need to request a claim review or start court proceedings, you should first get advice from a legal team that’s experienced in this area. Your lawyer will:
- review your insurance policy
- find out why your claim was denied
- advise you on whether you’re eligible for a payout
- help you request a review
fix any issues that caused your claim to be denied in the first place.
How can Main Lawyers help?
Making a TPD claim in NSW can be a minefield, but our experienced team can guide you through the entire journey.
We can:
- work with you throughout the claim process
- deal with the insurers on your behalf
- check your policy to ensure you get all the benefits you’re entitled to.
We can also manage the disputes process if your TPD insurance claim has been declined. We’ll find out why it was denied and get the best possible outcome for you.
So if your total and permanent disability claim has been rejected, don’t wait. Contact us to see how we can help.