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Total and permanent disability (TPD) insurance

Section: 13.2

Permanent incapacity, under the SIS conditions of release, means ill health (whether physical or mental), where the trustee is reasonably satisfied that the member is unlikely, because of the ill heath, to engage in gainful employment for which the member is reasonably qualified by education, training or experience.

An insurer generally defines total and permanent disability as:

  • Any occupation - circumstances which leave a person unable to engage in gainful employment in any occupation for which the member is reasonably qualified by education, training or experience, or
  • Own occupation - circumstances which leave a person unable to work again in their own occupation they held just prior to TPD.

The SIS definition of permanent incapacity is an 'any occupation' definition.

Super funds are generally prohibited from taking out 'own occupation' TPD policies on behalf of their members from 1 July 2014, as a benefit may become payable under the policy, despite the fact that the member may still be able to engage in some other employment for which they were qualified by education, training or experience, and therefore would not qualify to have the payment released from superannuation.

'Any-occupation' TPD policies that provide additional ancillary lump sum benefits, such as loss of limbs or sight benefits, without requiring the member to also satisfy the permanent incapacity requirement, are also not able to be provided through superannuation.

Last modified: Wednesday, July 24, 2019