When it comes to superannuation funds, we’re typically told that having only one fund (rather than a number of different funds) is better – lower fees and all your super in one place.
For example, by just having the one account you will save costs by paying only one set of fees, reduce paperwork, and make it easier to keep track of your superannuation money.
But did you know that by consolidating your superannuation may impact you negatively should you suffer an injury or illness that renders you unable to work? Where in this instance you could potentially make several claims for a TPD benefit for the same injury or illness. How so, you ask?
Well, the more superannuation accounts you have the more insurance benefits, such as Total and Permanent Disablement (TPD), you may have to claim on. Most superannuation funds offer insurances such as TPD, which is a lump sum benefit paid to you if you sustain an illness or injury that affects your capacity to work.
These payments are not affected by a personal injury claim or by whether you have made a TPD claim with another fund. The amount of benefit can range from a few thousand dollars to hundreds of thousands of dollars. So you may end up with more than one TPD payout from a superannuation fund, totaling a nice little sum!
Understanding TPD Insurance in Super – How Do You Make a Claim for TPD Insurance?
To be successful in your claim for a TPD payout from a superannuation fund, you must meet the definition of TPD according to your fund’s policy.
TPD is usually defined as:
- You are unlikely to be able to work again in your normal occupation following an illness or injury;
- You are unlikely to be able to work in an occupation suitable to your training and experience following an illness or injury;
- You are unlikely to be able to perform any work at all following an illness or injury.
Each insurer has different definitions of what is or is not considered to be totally and permanently disabled. You can find the definition of TPD in your super fund’s product disclosure statement.
What are the eligibility requirements TPD Insurance in Super?
In order for a claim to be successful, certain eligibility requirements must be met. These can include:
- You must suffer from an illness or injury that has caused you to stop working, or if you were not working at the time you acquired your illness or injury, then such has rendered you unable to work or perform activities of daily living;
- The required waiting period has expired (usually 3-6 months), during which time you have not returned to the workforce;
- You have TPD insurance attached to your superannuation fund; and
- You were under the applicable preservation age at the date you acquired your illness or injury (usually 65 years).
Providing you meet the definition and eligibility requirements your claim for a TPD benefit from your superannuation fund is likely to be successful. You are able to collect a TPD benefit from each superannuation fund to which you belong for the same illness or injury if, at the time you suffered your medical illness or injury, you were a member of more than one superannuation fund that provides a TPD insurance benefit.
So don’t stress if you haven’t merged all your accounts into one…. It may be more beneficial should the worst happen from an illness or injury position if you haven’t!