Published 01 Nov 2017
Total and permanent disability (TPD) policies provide financial support to people who have sustained serious injuries or illnesses that prevent them from working.
However, policies have stringent criteria that specify the level of the claimant's incapacity before a payout will be approved.
While every product is different, the wording is similar across many types of TPD cover. Policies usually state that the individual must be unlikely to ever again engage in paid work for which they have the education, training or experience to perform.
Previously, one of the accepted authority cases for calculating whether someone could return to work was White v The Board of Trustees (1997). The case set a precedent, resulting in the implementation of a 50 per cent rule for claims.
In other words, claimants were deemed successful of proving they were "unlikely" to ever return to work if the chance of them doing so was less than 50 per cent.
A key case from last year may see future claims judged differently, however.
Did TAL v Shuetrim change the rules?
TAL v Shuetrim went before the NSW Court of Appeal in March last year. The case involved a police officer who suffered an elbow injury during training and was subsequently medically discharged after also being diagnosed with an anxiety disorder.
The trial judge used White v The Board of Trustees as a benchmark, and approved the man's TPD claims against two insurers, which paid out approximately $600,000 and $200,000, respectively.
One of the insurers, TAL Life, appealed the decision, stating that White v The Board of Trustees is often misapplied in TPD claims. The insurer's counsel instead argued that the correct precedent was held in Beverley v Tyndall Life Insurance Co Ltd (1999).
According to the latter case, "unlikely" was interpreted as "no probable chance or even improbable" that the individual would return to work. This is a more stringent application than the 50 per cent rule.
What does this mean for future TPD claims?
TAL Life successfully appealed its case, resulting in the appellate judges ruling the claimant was not totally and permanently disabled as set out in his insurance policies.
The man's elbow injury was likely to recover over time and his long-term psychological prognosis was similarly positive. Several medical practitioners agreed he could return to some forms of employment in the future.
But the case has important ramifications for other TPD claimants, as it suggests future cases may be judged according to stricter standards.
This is one of the many reasons why it is crucial to contact experienced TPD claim experts such as Gerard Malouf & Partners Superannuation Lawyers to fight your case. Please contact us today to discuss your claim.