Many of us are guilty of not carefully reading the clauses in our superannuation fund deed and other documents and are just content to let our employer make fortnightly contributions and hope that we have enough money put away to retire on if the time ever arrives.
However, in having this nonchalant attitude we may not be making the most of our superannuation policies. What happens if I get sick and cannot work? What happens if I suffer an injury at home and I am no longer fit to work? How can I afford to support my family and continue to pay the bills? These are issues which people face every day. They are also issues which may be addressed if we have the appropriate insurances added into our superannuation policy.
Total and Permanent Disability Benefit
Many superannuation policies have coverage for a disability insurance referred to as Total and Permanent Disability Insurance (TPD). This insurance is a lump sum benefit which is paid in most cases if you can establish that you are permanently unfit for your usual employment, or for any other type of employment for which you are qualified taking into consideration your training, experience and education.
This type of insurance is not an automatic coverage in all policies.
Review your superannuation policy
You should look closely at your policy to see if the coverage is offered and the terms of such coverage. To take up the option of the coverage it will most likely mean an increase in your premium contribution.
Prior to taking out the coverage you need to consider things like your financial position, how much the contributions are, the benefit payable, and whether that policy suits your needs.
How does it work?
This Total and Permanent Disability benefit is different from a workers compensation claim or motor vehicle claim.
It does not usually matter how your injury or illness occurred.
It does not need to arise out of the course of your employment or a motor vehicle accident. Your disability may be an illness which has rendered you incapable of returning to work. You may have suffered a catastrophic injury whilst performing renovations at home. There is no requirement for any negligence to have occurred to claim on the policy.
You will however need to establish a “total and permanent disability” for your employment.
What can you claim?
In most cases you can also claim your TPD benefit if you have a workers compensation claim or motor vehicle accident claim provided you are unable to return to work.
If you have a successful TPD claim there are two elements.
The first element is the lump sum payment which is based upon the level of TPD insurance coverage which is held.
The second element is the early release of your accumulated superannuation funds.
If you do not qualify for the TPD benefit and are unable to work you still may be able to make a claim on your superannuation policy for part of full release of your funds as a result of invalidity or financial hardship.
In order to make a TPD claim you will need medical evidence from qualified treating medical practitioners and your documents form your employer. Statements will need to be completed and claim forms lodged with your fund manager.
Summary
TPD Insurance should be a part of your estate planning. In addition to having TPD insurance you should ensure that you have a valid power of attorney in place that enables your attorney to access and deal with your insurance on your behalf if you are unable to do so. You can contact us if you require assistance in ascertaining whether you have TPD insurance incorporated in your superannuation fund.
If you or someone you know wants more information or needs help or advice, please contact us on (08) 8344 6422 or email [email protected].