On behalf of participating life insurance member companies, the Financial Services Council (FSC) has announced a new initiative designed to ensure that customers’ total and permanent disability (TPD) cover is not affected if they lose their job, are stood down, or have reduced working hours due to the COVID-19 pandemic.
The goal is to prevent any coverage changes being automatically triggered because of the coronavirus crisis. The commitment applies until September 27, with claims to be lodged before 2021, to align with the current JobKeeper Payment scheme.
“Millions of working Australians have TPD cover through superannuation which pays out a lump sum if you become totally and permanently disabled because of illness or injury,” noted FSC chief executive Sally Loane.
“A claim for TPD is assessed on whether the person is expected to be able to work ever again. For this reason, the TPD definition used to assess a claim is based on the person’s recent working arrangements.”
Loane said it typically depends on the number of hours the person was working and whether they were in casual work before the illness or injury took place.
“Broadly speaking, the fewer hours you work, the stricter the definition used to assess your TPD claim,” she explained. “For most people, changes to TPD definitions happen only after their working arrangements have changed for six or 12 months (to cover parental leave, for example).
“For others, this change can happen after three months, depending on the particular policy wording. What this means is that some Australians who lost their job, were stood down, or had reduced working hours due to COVID could see their TPD coverage change from June 11, 2020.”
The abovementioned date is three months after the outbreak was declared a global pandemic by the World Health Organisation.
To ensure Australians keep the cover they had based on working arrangements prior to the pandemic declaration, Loane said participating life insurers – who will confirm their participation by making a statement on their respective websites – will assess TPD claims based on working arrangements as of March 11.
