If you are dealing with a major illness or injury and have had to stop working on a temporary or permanent basis, you may need to claim on your income protection or total and permanent disability (TPD) insurance. If dealing with your insurer is creating additional stress for you and your family, or you have been denied benefits under a policy, you can take steps to ensure your claim is properly and fairly assessed and your entitlement to payment is protected.
What is TPD and income protection insurance?
TPD insurance provides a lump sum payment if you can no longer work in your usual occupation or other type of employment, based on your qualifications, experience and training. Generally, TPD entitlements may be paid for any type of injury or illness that prevents you from returning to active employment – no matter how the condition was caused and regardless of fault.
TPD insurance may exist as a stand-alone policy or form part of your superannuation. In fact, many people do not realise that they even have TPD insurance, particularly when held through a superannuation policy.
Income protection pays a monthly benefit (usually, up to 75% of your income) if you are unable to work over a specified period due to certain illnesses or injuries.
Claiming insurance – understanding your entitlements
Your entitlements under TPD or income protection insurance are governed by an insurance policy – a legally binding contract between you and the insurer. As with all legal contracts, the terms and conditions vary considerably between policies and providers. Legislation requires that all consumers be provided a Product Disclosure Statement (PDS) when entering insurance contracts. The PDS contains the policy’s terms and conditions. For many however, it is not until a crisis strikes that we drill down into the ‘fine print’ of the policy document to understand our entitlements.
Eligibility for entitlements under TPD insurance requires claimants to demonstrate that they have a total and permanent disability – this generally means you have been unable to work in your usual occupation for at least six months and are likely never to be able to engage in any gainful work for which you are reasonably qualified.
Eligibility for income protection will depend on the terms of the policy, which may vary with regard to waiting periods, the type of injury or illness covered and the duration of time that payments will be made.
Insurers (and fund managers) have their own processes for handling and determining claims. After a claim is lodged, the insurer may request additional information or that a claimant be examined by its own medical expert. These requests are generally considered reasonable however appointed medical assessors should have the appropriate expertise to deal with the type of illness or injury suffered. An assessment conducted by an expert not adequately skilled in the disease or condition could result in conflicting opinions about the illness or injury, affecting entitlements.
Challenging decisions made by insurers – how the AFCA can help
The refusal to pay benefits under an income protection or TPD policy may be based on factors such as the insurer’s interpretation of defined terms or supporting medical evidence. Disputing the denial of entitlements will involve complex legal and medical issues.
If you are dissatisfied with an insurer’s decision to refuse to pay a claim, its calculation of benefits, or you think the insurer is taking an unreasonable amount of time to consider the claim, you can request an internal review.
If you are still dissatisfied with the decision after an internal review, you may be eligible to lodge a complaint with the Australian Financial Complaints Authority (AFCA).
The AFCA helps resolve disputes between consumers and financial firms including insurers and superannuation funds about insurance products such as income protection, trauma and TPD. Types of insurance-related complaints that the AFCA may consider include:
- delays in processing claims;
- the calculation of entitlements under a policy;
- the denial to pay a claim based on factors such as non-disclosure of a pre-existing condition, exclusion terms, an allegation that the claim is false or fraudulent or a claim that the policy has lapsed or been cancelled;
- the refusal to pay benefits based on a determination that the loss claimed has not been suffered;
- misleading or inappropriate advice or failing to provide advice about the insurance policy;
- decisions to cancel a policy or the failure to action a request to increase insurance cover;
- privacy and confidentiality issues.
Dispute resolution through the AFCA
The AFCA determines disputes based on an opinion that is fair and reasonable having regard to the circumstances, legal principles and relevant industry codes and practice.
Once lodged, a claim is referred for review. Simple matters may be fast tracked for early resolution or determination, while more complicated matters will be case managed.
Informal processes such as negotiation and conciliation are used for most disputes. The AFCA will facilitate this process and provide guidance by suggesting the type of outcome that may eventuate if the matter is not resolved and proceeds to determination.
The AFCA will determine a matter if informal negotiations do not achieve a result, or if it considers the matter warrants determination without negotiation between the parties.
In some cases, an immediate binding decision will be made and in others, a preliminary assessment provided. The assessment includes an overview of the facts and issues raised in the complaint and an opinion on how the AFCA considers the matter should be resolved. The parties are given a timeframe within which to resolve the dispute in line with the assessment, otherwise a determination will be made.
Decisions are made in writing, setting out the AFCA’s remedy including any award of compensation. If the consumer accepts the decision, then the financial firm must comply within the stipulated timeframe. Determinations regarding non-superannuation matters may be challenged through other legal processes, such as Court proceedings.
How your lawyer can help
Navigating the terms of complex policy documents and understanding your entitlements while trying to cope with the stress of illness and injury is difficult enough. When a claim is delayed or denied, or you feel as if you are being asked to constantly ‘jump through hoops’, the matter can become overwhelming. Putting your claim in the hands of an experienced lawyer can help lighten the load and ensure that your rights are properly protected by:
- helping you to identify existing policies that may provide benefits and reviewing and explaining your entitlements under the insurance contract;
- preparing your claim, arranging supporting documents and lodging the claim within required timeframes;
- dealing with requests from an insurer or fund manager for additional information and identifying and objecting to any unreasonable requests;
- negotiating with the insurer fund on your behalf and following up your claim to ensure it is assessed in a timely manner and in accordance with the insurer’s obligations;
- representing you at the AFCA and identifying key legal issues to ensure your complaint is properly articulated and supported by relevant evidence;
- advising on further or alternate legal avenues, if relevant, after your dispute is determined.
If you or someone you know wants more information or needs help or advice, please contact us on (07) 4724 1016 or email [email protected].
