The top ten common misconceptions about TPD (Total and Permanent Disability) claims can significantly impact people’s understanding of how the disability insurance claim process works.
These false beliefs are widespread due to a lack of knowledge and awareness regarding the TPD claims process. Generally, a winning outcome relies on having accurate information and expert legal advice when dealing with insurance companies and pursuing disability insurance benefits.
So, to ensure clarity when making a TPD insurance claim through a super fund, prepare to debunk the Top 10 Misconceptions regarding TPD claims.
Background of TPD Claims
For many Aussies living with a Total and Permanent Disability, a successful TPD claim is a vital source of financial support. In Australia, this type of insurance claim is commonly associated with superannuation funds, as TPD insurance is often an additional benefit for fund members.
In the event of a winning TPD claim, the claimant receives a lump sum benefit, which provides a much-needed financial resource during a challenging period. However, most people only have one disability insurance claim during their lifetime and often have misconceptions about the TPD payout process.
If this is your situation, it’s essential that you know the facts and clear up any misunderstandings so you can effectively navigate the claims process and access all your TPD benefits. Read on to discover the Top 10 Misconceptions about TPD claims and the reality of how it works.
Misconception 1: You Must Be Disabled to Qualify as TPD
People making a permanent disability claim for the first time sometimes think they must have a severe injury or mental illness or be ‘disabled’ to qualify as TPD. In reality, satisfying the definition of Total and Permanent Disability contained in TPD insurance policy T&Cs is not the same as satisfying the disabled definition used by other entities like Centrelink.
The Truth About Meeting the TPD Definition
Generally, to meet the TPD definition, you must show that your injury, illness, or mental health condition prevents you from working in your regular job or any other occupation that fits your skills, training, or education. Furthermore, your long-term disability does not necessarily mean you are ‘disabled’; it simply means you can no longer complete part or all the tasks involved in your regular job.
In fact, you could claim a TPD payout and then retrain to work in a different industry. Depending on your policy terms and conditions – always seek legal advice before making these choices.
Aussie Injury Lawyers has a 99% success rate for superannuation insurance claims. Hence, we have helped thousands of everyday Australians meet their definition of TPD. Contact us now for your free case assessment – Call 1300 873 252
Misconception 2: It’s Difficult to Win a TPD Claim
A common misconception about TPD claims is that they are difficult to win. While it is true that the claims process can be complex and time-consuming, having a successful TPD claim is not impossible, especially when working with an expert insurance claim lawyer.
Top Tips for Winning a TPD Claim
1. Provide compelling evidence that proves your level of disability and how it impacts your capacity to earn an income. Doctors and medical specialists typically supply the necessary documentation to strengthen your case, including clinical notes, test results, and assessments.
2. Understanding your terms and conditions is essential, mainly how your policy defines Total and Permanent Disability. Meeting this definition of TPD is crucial for success.
3. Seeking expert legal advice will significantly improve your opportunity to win. An experienced TPD lawyer regularly negotiates with all the well-known permanent disability insurance providers and understands their expectations of proof.
While each case is unique, understanding the requirements and providing the necessary documents can significantly improve the chances of winning a TPD claim. Please understand that the process is challenging, but proper preparation with expert guidance is key to success.
When you choose Aussie Injury Lawyers to manage your case, you can rely on our 99% claim success rate as your guarantee of a winning outcome.
Misconception 3: It’s Expensive to Hire a TPD Lawyer
It is a common misconception that seeking legal advice for a TPD claim will cost a lot of money. While it is true that hiring a TPD lawyer involves legal fees, the cost is significantly less than if you were making a personal injury claim. Furthermore, some insurance lawyers work on a no-win, no-fee basis, meaning you only pay when you win, removing any financial risk.
Why The Cost is Lower Than You Might Expect
Here are some reasons why a TPD claim costs less than expected when working with the Aussie Injury Lawyers team.
We don’t charge a percentage of your payout – before we get started on your claim, you will know how much your claim is worth and our fixed or capped legal fees for a successful outcome.
Our legal services are 100% No Win, No Fee – unlike some compensation law firms, Aussie Injury Lawyers is 100% No Win, No Pay. Our legal funding means we cover your disbursement costs (medical reports and expert assessments) until we win your case. If you lose, you owe us nothing.
Get a competitive quote – Aussie Injury Lawyers provides a free, no obligation, comprehensive claim investigation. At no charge, we will:
- Locate your insurance policies & contact the insurers
- Find the lump sum payout value
- Examine the terms and conditions (particularly the definition of disability)
- Advise on your likelihood of success
- Provide a fixed or capped price for your case.
Misconception 4 – TPD Payouts are Only for Physical Disabilities
Some people mistakenly believe that only physical injuries qualify as a total and permanent disability when claiming a TPD payout.
However, TPD insurance can typically cover physical and psychological disabilities, depending on the insurance provider and coverage. In fact, you might be surprised to learn that mental illness is the leading type of medical ailment for successful disability insurance payouts in Australia.
Common Mental Health Conditions Defined as TPD
Any long-term or permanent mental health condition that stops you from working could be defined as TPD. However, some commonly recognised disorders include:
- Severe depression and anxiety
- Post-Traumatic Stress Disorder (PTSD)
- Bipolar disorder
- Obsessive-compulsive disorder
- Social anxiety disorder
Typically, proving a mental health claim is more challenging than proving a physical injury claim; however, the TPD experts at Aussie Injury Lawyers have an excellent success rate of 99%, so contact us now to discuss how we might help you.
Misconception 5 – Tax Applies to TPD Payouts in Australia
If you believe tax applies to TPD payouts in Australia, you will be happy to learn they are tax-free, depending on how you manage your lump sum payment. To be sure of your tax obligations, we recommend you consult with a tax professional to understand your situation.
General TPD Tax Rules
- If you leave the TPD funds in your super account until retirement age, you pay no income tax (apart from the tax that may apply to your superannuation account)
- If you are age 60 or older, you will likely pay no tax
- For people younger than 60, TPD tax calculations consider your eligible service date, age, and the date you joined the super fund.
- If you are below age 60 and withdraw benefit funds from super, some are tax-free, and the rest is taxed at 22%
- When you have reached your preservation age but are under 60, you can withdraw up to $225,000 tax-free from your super.
Misconception 6 – Making a TPD Claim Will Impact My Super Account Balance
Some people fear that making a total and permanent disability (TPD) claim will reduce their superannuation account balance. This situation is not true.
How TPD Payouts Influence Superannuation
When you successfully claim TPD benefits, an insurance policy funds the payout (not your superannuation provider); hence, your super balance is not reduced. Additionally, this deposit is not a pre-payment of your funds, so it does not lower your retirement savings.
In fact, most people have a considerable increase in their accounts when there is a lump sum deposit. (Some claimants receive regular monthly payments.)
Misconception 7 – A TPD Benefit Payout Impacts Centrelink Benefits
Another popular misconception is that a TPD benefit payout will alter Centrelink’s benefits.
The Relationship Between Centrelink and TPD Claims
First, know there is no Centrelink impact for a super account TPD benefit deposit. The Centrelink means test only includes super balances once you reach retirement age. There is generally no change if you receive other Centrelink benefits like child support.
But, when you withdraw TPD funds from your superannuation account, there could be a change to your Centrelink entitlements. Furthermore, it is how these two interact, so it is best to get financial advice before making any withdrawal decisions.
Misconception 8 – TPD Claims Automatically Happen
Some people mistakenly believe that a TPD claim automatically happens, and they receive a payout. They think the insurer knows about their harm, which triggers a lump sum benefit payment. This is different from how it works.
How the TPD Claim Process Works
TPD insurance policies require a legitimate and approved claim before making a payout. For a successful outcome, insured people must meet the criteria and go through the claim process before receiving funds. Here are the steps for a winning claim:
1. Contact the insurer to let them know about your claim
2. Collate evidence to support your disability and how it impacts your work capacity
3. Fill in the claim forms and attach a supporting letter
4. Lodge your TPD claim
5. Case assessment
6. Decision and possible payout, denied claim or request for more information
7. Appeal rejected claim
The above process can change between insurance companies, so please follow the insurer’s instructions.
Misconception 9 – TPD Insurance is the Same as Income Protection
TPD insurance is sometimes confused with income protection coverage, but they serve two different purposes.
The Difference Between TPD and Income Protection Insurance
While TPD insurance provides a once-off lump sum payment as a full and final settlement of your permanent disability claim.
A successful income protection claim (also known as a TTD Claim) offers a regular source of income to replace your lost wages due to a temporary medical condition. Furthermore, you can have both types of insurance coverage through your super as they cover different circumstances.
Here are the primary differences between TPD (Total and Permanent Disability) insurance and income protection insurance:
- It pays a lump sum if you acquire a permanent disability and can’t work again.
- It gives you a one-time payout to help cover living expenses like medical bills, rehabilitation costs, energy bills, mortgage etc.
Income Protection Insurance
- It offers regular payments to replace your income if you cannot work due to a temporary illness or injury.
- When approved, it pays out a percentage of your wage for a predetermined period, typically two years, five years, or until you turn 60 or 65.
- Finally, the value insured under income protection cover is not limited to the amount insured under your life insurance policy.
Misconception 10 – TPD Claims Have a Time Limit
Some Aussies mistakenly believe that, like personal injury claims, there is a fixed time limit for a TPD claim. This circumstance isn’t necessarily factual.
While certain injury cases may have strict time constraints, such as WorkCover or car accident claims, most TPD claims do not. Additionally, if you are claiming through your superannuation fund, you may have up to three years after the date of disability to lodge your case.
However, please understand that the earlier you begin, the higher your chance of success. Therefore, contacting your insurer as soon as possible is best when claiming TPD insurance benefits.
Benefits of Hiring an Experienced Insurance Claim Lawyer
Hiring an experienced disability insurance claim lawyer for your case can provide numerous benefits.
1. A skilled lawyer simplifies the process by handling all the paperwork and complex claim forms on your behalf, saving you time and stress.
2. A TPD solicitor collates the documents required for your case, like medical reports, statements, and assessments. Robust evidence is essential to establish your level of permanent disability.
3. Additionally, an experienced lawyer will address the legal aspects of your policy terms and conditions. Doing so makes them present your case most compellingly, increasing the chance of a successful claim.
When you choose Aussie Injury Lawyers for your claim, you can relax knowing that all our insurance legal services are 100% No Win, No Fee. Pay when you win and zero if you lose. It’s free to know if you can claim the value of your payout and your chance of success, so Call Now – at 1300 873 252.