You web browser may not be properly supported. To use this site and all its features we recommend using the latest versions of Chrome, Safari or Firefox

Adl Supertpd Small

In group life policies sometimes the ‘unlikely to work’ definition applies and sometimes it doesn’t. This blog highlights when the more onerous ‘activities of daily living’ definition may apply.

Which TPD definition applies to me?

Group life policies of insurance, offered through membership of superannuation funds, usually offer death and disablement cover. Such insurance cover allows a member to make a claim against the policy for total and permanent disablement, assuming the policy conditions are met.

Previously, we have looked at the “unlikely to work” total and permanent disablement definition. Typically, this TPD definition requires that you have ceased work due to an injury or illness for at least six consecutive months, and as at the date of disablement, are unlikely ever to return to any gainful employment for which you are reasonably suited by education, training or experience.

Sometimes, however, a more difficult definition to satisfy will apply to the assessment of a TPD claim.

It is important to be aware of the circumstances when this may occur.

In situations where a worker is injured, it is not unusual for working hours to be reduced. Ultimately, due to the injury, the worker may be forced to cease work altogether.

If the hours worked are reduced to less than an average of 15 hours for the 12 months prior to the cessation of work, the applicable TPD definition may shift to the more onerous activities of daily living (“ADL”) definition.

This means the applicant will have to show s/he is totally and irreversibly unable to perform at least 2 of the ADL’s, such as feeding and dressing oneself, without the assistance of another adult or appropriate aids. Many workers who satisfy the ‘unlikely to work’ definition will not meet the ADL definition.

Of course, one must be guided by medical advice in making decisions about returning to work. However, it is important to know such decisions may impact on a future TPD claim.

Other circumstances where the change in applicable definition may occur are:

  1. When you cease employment with a specific employer.

The recent Victorian Supreme Court of Appeal decision in MLC Nominees Pty Ltd-v- Daffy [2017] VSCA 110 addressed the effect of termination of employment on the applicable TPD benefit and held that despite Mr Daffy’s injury occurring prior to the cessation of employment, the ADL definition applied.

Of course this decision was specific to the applicable MLC policy but it is instructive in respect of the Court’s approach to the interpretation of insurance contracts, and the huge impact a change in circumstances may have on an individual. In Daffy the sum insured was in excess of $1.5m.

  1. If your employment status is that of a casual worker, irrespective of your hours worked;
  2. You are over the age 60;
  3. Not gainfully employed; and
  4. If you work in what is regarded by the policy of insurance as a hazardous occupation. This can be very broad and include process workers, labourers and those working in highly repetitive jobs.

Take away lesson:

Always check your insurance policy so that you are aware of its terms.
Having done so, you may then make an informed decision regarding continuing to opt in to paying premiums for the group life policy or whether it is in your best interests to seek advice regarding alternate disability insurance.

Thank you for your feedback.

Related blog posts

Consumer and the Law
Banking Royal Commission legislation introduced

On 28 November 2019, the Government introduced legislation in line with the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The legislation is designed to provide further protections for consumers and small businesses and is set to be passed in early 2020. Below is an overview of the proposed legislation. Click here for a recap of the Banking Royal Commission from our Head of Class Actions, Ben Hardwick. Under the proposed legislation, mortgage brokers will be required to act in the best interests of consumers when providing credit assistance. That means where there is a conflict of interest between the consumer’s...

Gavel and weights two people talking resized
Superannuation and Insurance
An end to for-profit Super funds?

A lot has been said and written about the Productivity Commission’s ground-breaking report into the efficiency and competitiveness (or lack thereof) of the superannuation industry since it was publically released a few weeks ago. Surprisingly however, one of the Commission’s 31 recommendations appears to have attracted no attention, despite the significant implications it would have for one prominent part of the industry: retail (or for-profit) super funds. The Commission recommended that all fees charged by APRA-regulated superannuation funds should be levied on a cost-recovery basis. The Commission reasoned that because super funds are legally obliged to act in members’ best...

Superannuation and Insurance
Under performance of retail Super funds confirmed

The Productivity Commissions’ final report into the superannuation system released today found the current system is “harming millions of members” with underperforming funds, multiple accounts and excessive fees. On 10 January 2019, the Productivity Commission released its final report into the superannuation system. Much like the Banking Royal Commission, the final report is particularly critical of the retail sector, both for underperformance and exorbitant fees. The final report found a significant number of super products were underperforming and that “most (but not all) affected members are in retail funds.” The report found that 77% of 5 million underperforming super...

Investment Statement Cropped

We're here to help

Start your online claim check now. Or, if you have a question, get in touch with our team.