Published 19 Mar 2018
Whether it's a physical or psychological ailment, total and permanent disabilities (TPDs) often have a significant impact on an individual and their family. Unfortunately, unforeseen circumstances can strike at any time, and this creates uncertainty for the future.
TPD insurance provides financial support to people who suffer a debilitating injury or illness that prevents them from returning to the workplace. Every policy is different, but most offer a lump sum payment to successful claimants to cover a range of lifetime expenses.
Here is a brief overview of some of the benefits claimants can expect from their TPD cover.
1. Income and superannuation losses
Most people who can't work again experience a substantial drop in their household income, as well as the knock-on effect for their retirement savings.
The younger the claimant, the more likely they will receive a bigger payment for lost income and superannuation due to the number of years remaining in their working life.
A successful TPD claimant can also collect the super they have already accumulated early. Men and women had an average of $111,853 and $68,499 in their super funds respectively in 2015-16, according to the Association of Superannuation Funds of Australia.
2. Hospital bills and future medical care
Past and future medical costs can be sizeable for people who have TPDs, as they may require ongoing lifetime care. TPD insurance should cover the majority of these expenses, as well as any money required for medications, treatments or specialist services.
Claimants may also receive funding for home modifications that could be necessary after they become disabled, such as alterations to homes and cars to make them more accessible and easier to use.
3. Mortgage payments and debts
The average household debt in Australia is 211 per cent of net disposable annual income, figures from the OECD revealed in 2015. In other words, families are spending more than twice as much as they earn each year.
Meanwhile, MoneySmart figures show the average credit card holder is $4,270 in arrears, with the country owing more than $33 billion on plastic.
Disabilities can place significant strain on people who have outstanding loans, mortgages and other debts. Fortunately, TPD payouts may include coverage for these contingencies.
What happens if my TPD claim is unsuccessful?
TPD cover is available as a stand-alone insurance product and is also often provided as an additional benefit through people's superannuation funds.
However, due to the size of lump sum payments, insurers can be reluctant to approve TPD payouts. This is particularly true for psychological disabilities, such as post-traumatic stress disorder, where the symptoms are less measurable and often fluctuate in severity over time.
If your TPD claim has been rejected, please contact Gerard Malouf & Partners Superannuation Lawyers to see how we can help you receive the financial support to which you are entitled.