TPD Instalment Payments – Your Verdict   

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It’s worth considering the concept of instalment benefit payments for future TPD claims in circumstances where the permanency of the condition is difficult or impossible to objectively assess.
  • Agree (59%)
  • Disagree (35%)
  • Not sure (7%)

The concept of instalment benefit payments for future TPD claims in circumstances where the permanency of the condition is difficult to assess, has met with qualified support from the adviser community.

As we go to press nearly six in 10 (59%) of those voting in our first poll for 2024 agreed with the premise that instalment benefits payments for future TPD claims were worth considering where it’s difficult or impossible to objectively assess how permanent the claimant’s condition is.

However, 35% disagreed that instalment payments were a viable option, while 5% were not sure.

…the focus of our poll is on the growing proportion of TPD claims for which objective assessment is problematic at best…

While the bulk of TPD claims today can still be assessed under an objective set of measures, the focus of our poll (arising from the discussion at last month’s TPD Round Table) is on the growing proportion of TPD claims for which objective assessment is problematic at best.

We proposed that if the condition or event or episode on which a TPD claim is based can only be assessed subjectively – such as some chronic fatigue or mental health-related conditions – then would it be possible to structure a TPD cover offer that would pay by instalments, presumably with the permanency of the condition re-assessed over time?

However one adviser commenting on our poll raised the question as to how on-going payments would work with TPD.

“Isn’t this what Income Protection is for? Most new Income Protection policies now have on-going income offset clauses, and receiving on-going TPD payments would likely offset any on-going Income Protection payments as this would be deemed as ongoing income.”

He adds that both TPD and IP need a full revamp.

Our poll remains open for another week and we welcome your thoughts…



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2 COMMENTS

  1. Sunsuper/ART have TPD Assist which pays out over 5 years. The reason I was given was that a large % of TPD claimants were back working after 5 years. I can see this as a way of reducing big claims, but still paying out when needed. I would take some Insurers to have the guts to go first or APRA stepping in just like they did with Income Protection

  2. Magicians need to divert your attention to affect a trick and that’s what’s going on here with a call for drip feed of TPD benefits.

    So that’s a review of your TPD every year!. For the minimum amount of claimants who would have actually return to work on and ANY occupation claim, that arrangement could easily be abused by insurers. And they do have a track record!.

    As to OWN occupation TPD, well we do pay a 40% premium for that particular product and yes it is possible that some claimants, like a micro surgeon with damaged hands and/or eyesight, could be back working as a pain specialist, after some retraining and partial rehabilitation of some physical incapacity. (Old Tyndall Life IP case)

    The elephant in the room in this debate is that millions of people who have DEFAULT super TPD cover where the insurer has NEVER ASSESSED the particular risk of that member.

    This is just batpoop crazy! DEFAULT cover is eroding the value of the Statutory Number 1 Fund. Insurers have to bite the bullet and tell the trustees of the superfunds that there must be a minimum personal underwriting, as it is very clear that the recent added severity of time clauses introduced in the last few years is clearly not working.

    The other point that seems to be missed is that the payment by drip feed of TPD payments with annual reassessments could slow up the footwork of an insurer who decides they want to pull out of their current three-year deal. Ordinarily when that happens the insurer assumes responsibility for any claims that are afoot at the time the contract ceases. This proposal could add years (a.k.a. add a “long tail” as they say in insurance) to the administrative costs of the insurer whose decides that providing death and TPD DEFAULT cover is no longer profitable. Remember how Comminsure pulled the pin on the TAL contract a decade ago?

    And we are still being kept in the dark in terms of the split between the cost of advised TPD business claims and default TPD claims, in the overall cost of TPD claims to the industry now being spun to advisers. Mushroom club.

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