TPD and income protection in your super after a car accident

The one thing to know first

Every motor accident scheme in Australia reduces or refuses compensation for a driver who was at fault. If you caused the accident, or were partly responsible, your CTP claim is smaller or does not exist.

The insurance inside your super does not work that way. It is an insurance policy, not a compensation scheme. The question it asks is whether your injury has left you unable to work, not who was to blame. A driver who ran a red light and a driver who was sitting at one are assessed on the same terms.

Policies do have exclusions, and the insurer will look at the circumstances. But ordinary carelessness on the road is not what those exclusions are aimed at.

What is actually in your super

When you join a super fund through an employer, most funds automatically attach insurance to the account and take the premium from your balance. It appears as a line on an annual statement most people do not read. Two kinds matter here.

• Total and permanent disablement, or TPD: a lump sum if illness or injury leaves you permanently unable to work.
• Income protection: a monthly payment for a set period while you cannot work. Not every fund includes this by default.

What "total and permanent disablement" means in practice

The phrase sounds absolute, and it puts people off. It does not mean you must be unable to do anything at all. Each policy has a written definition, and that definition is what you are assessed against. Most turn on your capacity to work, and two versions matter.

• Own occupation: you are unlikely ever to return to the job you were doing before the injury, even if you could do some other kind of work.
• Any occupation: you are unlikely ever to work again in any job you are reasonably suited to by education, training or experience. A harder test, because the insurer can point to work you could in theory retrain for.

Cover held inside super is usually the any-occupation kind, partly because of the rules on when money can be released from super. Find out which applies to you before assuming anything. Most definitions also require you to have been off work for a set period before you can be assessed, and your fund’s policy sets it.

Finding out what cover you have

1. Your most recent super statement, or the fund’s app or website. Look for a section called insurance, cover or benefits.
2. myGov, linked to the Australian Taxation Office. This lists every super account in your name, including ones you had forgotten, though not the insurance on each.
3. Call each fund and ask: what insurance was on my account on the date of the accident, what is the definition of disablement, and can you send me the policy document.

Why you may have more than one policy

Every time you started a job with an employer who used a different fund, a new account was often opened for you, with its own default policy. Someone who has had four employers can easily have two or three accounts still open. TPD is a lump sum, and you can generally claim under each policy that was active on the date of the accident. Income protection is different: policies usually reduce their payment for other income replacement you receive, so multiple income protection policies rarely stack.

Income protection: the faster-paying part

If your super includes income protection, it is usually the more immediate help. It pays a portion of your pre-accident income, monthly, while you cannot work. Two terms in the policy govern it: the waiting period, which is how long you must be off work before payments start, and the benefit period, which is how long they continue. Both vary widely between funds. Policies also commonly reduce the monthly benefit by amounts you receive for the same period from a workers compensation or motor accident scheme. That offset clause is one of the first things a lawyer reads.

How it fits with CTP and workers compensation

These are separate systems and they can run at the same time. A person hurt while driving for work might have a workers compensation claim, a CTP claim and a claim on the insurance in their super, all from the same accident. They interact rather than replace one another: a TPD lump sum is generally not reduced because you also have a CTP claim, but income protection often is offset against weekly scheme payments.

What the claim looks like, and how long it takes

1. You tell the fund you want to claim, and they send a claim pack.
2. You complete your part, your treating doctors complete theirs, and your employer usually confirms your role and last day at work.
3. The fund’s insurer assesses the claim, and may ask for more records or its own medical examination.
4. The insurer decides, and the fund’s trustee reviews the decision.
5. An accepted TPD benefit is paid into your super account, and you then apply to have it released. Tax can apply to money released early.

If a claim is declined, you can ask the fund to review the decision, and after that take a complaint to the Australian Financial Complaints Authority, which is free.

When to get advice

You do not need a lawyer to ask your fund what cover you have. Make that call yourself, this week. Speak to a lawyer who works in superannuation and insurance claims before you lodge if your injuries make a return to your previous work doubtful, if you have found cover in more than one fund, if a CTP or workers compensation claim is also running, or if the fund says cover was cancelled or a claim has been declined.

Superannuation claims are a distinct area of practice. The lawyer running your CTP claim may not do them, and a firm that does may not do CTP. Ask each what they cover, and ask about fees before engaging anyone.