A TPD payout provides much-needed financial relief when you’re injured and unable to work. The amount of compensation you receive depends on the type of superannuation policy you have and the terms of that policy. It’s also important to consider the severity of your injury, the job you worked at before the injury, and how long you’ve been off work.
If you’re unsure about your entitlement to TPD, speak to us today. Our specialist lawyers will analyse your super policy, outline your legal options, and provide a free estimate of how much you could receive.
What factors impact my TPD payout?
There are 2 main factors that impact the amount you may receive.
1. The type of superannuation policy you have
The TPD benefit you receive through your superannuation policy will either be ‘aged-based’ or ‘specific’ cover.
‘Aged-based’ cover
Aged-based cover is where your TPD compensation is determined by your age. It is the most common superannuation TPD benefit. Most workers automatically hold aged-based TPD cover through their superannuation fund, so you might be insured without realising it.
Since aged-based cover is part of a group insurance policy (meaning they cover many super fund members at once), your super fund determines the amount you’re insured for, as well as how this amount reduces as you age.
Generally speaking, aged-based cover means the older you are, the less you can expect from your TPD payout. However, the type of super policy you hold is not the only factor in determining your final compensation.
‘Specific’ cover
Specific cover is where you and your super fund have agreed to a particular amount of TPD insurance cover. Unlike aged-based cover, specific cover is not automatic. You can only get specific cover by contacting your super fund directly.
With specific cover, your TPD benefit can:
- Reduce as you get older (like aged-based cover), or
- Increase based on the Consumer Price Index (CPI), or
- Remain the same.
If you have specific cover, it’s important to check whether your benefit is subject to age, the CPI, or if it ‘remains the same’ (a fixed TPD benefit).
Though a fixed TPD benefit provides added certainty in the event of an injury, your premiums will be higher than other forms of cover.
2. The terms of your superannuation policy
The terms of your superannuation policy will affect your TPD payout. For example, policies have different definitions of ‘Total and Permanent Disability’. Many policies have a broad definition of TPD, so you must be unfit for all work before making a claim. However, some policies are narrower, only requiring proof that you can’t return to your work (or similar work within your education, experience and training).
In addition, you can claim TPD for partial disability under some super policies. This compensates you for lost income if you’re working reduced hours or light duties.
For more information, check the terms of your super policy or contact us today for a free policy assessment.
Other factors that can impact your TPD payout
In addition to the type and terms of your super policy, your TPD payout can also be affected by:
- The severity of your injury
- Your last job (prior to stopping work due to injury), and
- The length of time you’ve been unemployed.
Can I have multiple TPD claims?
Yes, you can have multiple claims if you have TPD policies with more than one super fund. You will need to meet each fund’s specific conditions and TPD definition. As a result, proving multiple claims can be difficult, and success with one fund does not guarantee success with others.
We strongly advise seeking legal advice before starting your claims. With multiple payments at stake, it’s crucial to understand the terms of your policies and how they affect each other. An expert TPD lawyer will analyse your policies and outline your TPD entitlements, giving you the best chance of winning multiple claims.
Does a TPD payout affect my other benefits?
No, a TPD payout will not affect most other benefits. This includes Workers Compensation and Income Protection payments.
The only exception is Centrelink. After your claim, the TPD payout is paid directly into your superannuation account. If you keep it there, the payout does not affect your Centrelink payments. However, withdrawing the funds can affect your entitlement to Centrelink.
Do I have to pay tax on my TPD payout?
Yes, but only if you withdraw it from your superannuation account.
After your TPD claim is approved, the compensation is added to your super balance. You do not have to pay tax at this stage. If you leave the payout in your super account until after retirement age, you won’t need to pay tax at all.
If you withdraw your TPD payout before retirement age, you will have to pay tax. Super balance withdrawals are usually taxed at 22%. However, the super fund performs a ‘tax-free uplift’ calculation for all TPD payouts. This means part of your withdrawal is tax free, and the rest is subject to a special tax rate.
The amount you can withdraw tax-free is calculated based on your ‘eligible service date’ (the date you became a member of your super fund).
Your fund will then determine your ‘effective tax rate’, which is the percentage of tax you will pay on the rest of your withdrawal. This can be anywhere between 1 – 18%. If you have more than one super account, the tax rate will be different for each one.
Do I need a lawyer?
While you can make a TPD claim without a lawyer, we always advise booking a free consultation before starting any legal action.
In addition to explaining the details of your super policy and estimating your final payout, your lawyer will outline the right strategy to win your claim.
If you choose to proceed with your claim, our experienced team will build you a strong, evidence-based case. We’re also experts at disputing insurer evidence and avoiding lengthy delays. If the insurer denies your claim (or offers you less than 100% of your TPD benefit), we will challenge the decision and ensure you get the compensation you deserve.
Best of all, our No Win No Fee guarantee means your claim is completely risk-free. There are no upfront costs, and absolutely nothing to pay until we win your claim. If we’re unsuccessful, you will never receive a bill from us. It’s that simple.
Speak to us today for free, obligation-free advice on your TPD claim.
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