As many as two million Australians could find it significantly more difficult to claim on their Total and Permanent Disablement (TPD) cover following changes to the TPD definition by one of Australia’s largest industry superfunds.
TPD cover is typically designed to protect a member who becomes disabled to such an extent that they are unlikely to be able to return to their usual occupation.
In November last year, AustralianSuper amended their TPD definition to include the phrase;
‘…or any job that you may reasonably become suited to with further education, training or experience….’
This change in definition could make it more difficult to make a claim. Previously an AustralianSuper member could make a TPD claim if it was unlikely that he or she would be able to engage in work for which they were reasonably suited by their education, training or experience.
Under the change in definition, there are concerns that the insurer will refuse a claim on the grounds that the policy holder may be retrained, reskilled or re-educated into another profession. The end result could mean that many people will not receive payment.
All new claims arising after 1 November 2014 will be assessed under the definition which will apply to new and existing members of AustralianSuper.
While AustralianSuper is the first to make such a change, it is expected that other industry superannuation funds will follow suit.
With 84% of Australians opting for the default TPD cover within their industry superannuation fund, these latest developments are concerning. These changes, compounded with rising premiums, can leave many policy holders uncertain as to what they are paying for.
While it can be easier and cheaper to take out insurance within superannuation, it’s vitally important that you understand your level of cover and are aware of any changes made to your policy.
Our advisors can help you review your current situation and assess the options available to you.