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Guide to Superannuation TPD Payouts.

If you’re unable to work due to injury or illness, you might be able to claim a total permanent disability insurance payout. Most Australians have TPD insurance in their superannuation funds, although many are unaware of this and may not realise they’re eligible for a superannuation disability payout. 

In fact, even after they discover they can claim a TPD payout from their superannuation funds, many Australians are surprised to learn that they’re actually entitled to make multiple claims. Read on to find out how this works, whether you can make multiple claims, and how to get your lump sum TPD payout sooner.

Your Guide to Superannuation Disability Payouts.

How much is a total permanent disability insurance payout? 

TPD payout amounts typically range between $60,000 and $300,000, with many payouts being over $200,000. Your insured benefit amount will be clearly identified on your superannuation member statement.

But your TPD payout amount could be a lot higher if you have multiple policies. Many Australians have multiple superannuation funds from changing jobs over the years. And although they may not be aware, many Australians also have multiple TPD insurance policies attached to these super funds. If this applies to you, you may be able to make multiple TPD claims.

Take, for example, our client Mary. Mary was diagnosed with MS in 2015, and when she came to Law Partners, she had no idea she had any TPD insurance. But after sorting through years of her unopened super statements, we discovered she had five valid TPD policies. We successfully claimed against all five policies for Mary, resulting in a total TPD payout amount of over $1 million.

If you’re not sure what policies you have, A TPD claims specialist can find out for you at no cost to you.

Do I have TPD insurance in my super, and do I qualify for a TPD payout?

Your superannuation member statements will indicate what insurance cover is included in your super, and the insured benefit amount.

Different insurance policies have different definitions to qualify for a TPD payout. But as a general rule, if you’ve been unable to work due to an injury or illness for an extended period (usually more than three months) with no expectation to return to work, then you may be entitled to a superannuation disability payout.

Call 13 15 15 and one of our TPD claim specialists can find out:

There’s no cost for this service.

For more information, you can also read our Superannuation TPD Claim Guide.

Find out how much you can claim.

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How long does it take to get a TPD payout from a superannuation fund?

Generally speaking, it takes 6-12 months for a TPD lump sum payout to be finalised. But some applications for benefits can drag on for much longer periods of time – read on to learn how to avoid delays. 

Insurance companies generally undertake to complete their assessments of TPD claims within six months. Some straightforward claims are finalised more quickly, however in more complicated claims the insurance company will often take more than six months to make a decision.

Once the insurance company has made their decision on a TPD claim, the trustee of the superannuation fund will also undertake their own assessment of the claim. This usually takes one to two months.

However, TPD claim assessments are often delayed because the application isn’t completed correctly, or important information is left out. If you fail to submit a thorough application, it’s likely you’ll end up going through a lengthy process of responding to multiple requests for information from the insurer, and this can really drag on. The result is often valid TPD claims being dropped because the process becomes too onerous for the applicants, who may already be struggling with injury or illness* 

*According to ASIC REPORT 633 – Holes in the safety net: A review of TPD insurance claims (page 50). 

Here are the three key steps to getting your TPD claim approved sooner:

  1. Submit a thorough application. Many people fail to supply all the evidence needed to support their TPD claims, so the insurer has to keep asking for more information and the process can really drag on. This is why many people who handle their own TPD claims end up failing to get the TPD payout they’re entitled to – they simply give up out of frustration.
  2. Include a thorough written submission explaining why your TPD claim should be approved. A well-written submission will clearly state how your situation satisfies the criteria in your TPD policy.
  3. Follow up with the insurer to make sure they have everything they need. Being proactive will help avoid unnecessary delays and frustration in the TPD claim process. 

A Law Partners TPD claim specialist can submit a thorough claim for you, to give you the best chance of receiving the maximum TPD payout amount in the shortest possible time frame. We win over 99% of our claims, and we work on a no win no fee basis, so you only pay our fees after you receive your TPD payout.

How is TPD paid out?

If your TPD insurance claim is approved, the lump sum is usually paid into your superannuation account, giving you the choice to:

  1. Withdraw the entire balance
  2. Make a partial withdrawal and leave the balance in your super
  3. Leave the entire balance in your super

Once your TPD payout amount has been paid into your super account, it’s a good idea to get financial advice on your options and the tax implications that apply to your situation. You should do this before you withdraw any funds from your super account.

Is a TPD payout considered taxable income?

A TPD payout is not considered taxable income, however if you withdraw part or all of your TPD payout amount from your super fund as a lump sum, you’ll need to pay “superannuation lump sum withdrawal tax”. The calculation is different for everyone, and if you have multiple super funds, the calculation will be different for each fund you make a withdrawal from.

How much tax will I pay on my TPD claim?

Find out how much you can claim.

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Many of our clients ask us about the relationship between a TPD payout and Centrelink benefits.

The first thing to understand is that your TPD payout will be paid directly into your superannuation account, so it won’t affect your Centrelink benefits. Your superannuation account balance is excluded from Centrelink means testing until you reach the Centrelink Age Pension age, which is between 65.5 and 67. If you’re receiving other benefits, such as child support payments, your TPD payout won’t affect those either.

However, if you withdraw any money from your TPD (or existing superannuation) balance, the withdrawal might impact your Centrelink entitlements. In other words, you only need to consider the link between your TPD payout and Centrelink benefits when you decide to access the money in your superannuation account.

There are different means tests that apply depending on which Centrelink benefits you receive, so it’s a good idea to get professional advice on your entitlements before you access your TPD benefit and/or superannuation account balance.

Whether you’re ready to make a claim or just considering your options, there’s no cost to speak to a TPD lawyer at Law Partners. We’d be happy to answer your questions on anything related to TPD claims, including the relationship between a TPD payout and Centrelink benefits.

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