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Life insurers ease rules for TPD claims during virus crisis

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The life industry has announced a temporary measure to support total and permanent disability (TPD) policyholders who have lost their jobs or are working less hours during this coronavirus outbreak.

Policyholders who make a claim will be assessed according to their employment status before the event was declared a pandemic on March 11 by the World Health Organisation, the Financial Services Council (FSC) says in a statement on behalf of participating member insurers.

The measure means workers with super-linked TPD policies will still enjoy the same level of cover regardless of their employment status. In normal circumstances, changes to TPD covers are automatically triggered if a policyholder has a new work arrangement in place.

“A claim for TPD is assessed on whether the person is expected to be able to work ever again,” FSC CEO Sally Loane said.  “For this reason, the TPD definition used to assess a claim is based on the person’s recent working arrangements.

“Typically, this depends on the number of hours the person was working and whether they were in casual work before the illness or injury happened. Broadly speaking, the fewer hours you work, the stricter the definition used to assess your TPD claim.”

The support measure will be in effect until September 27, when the  JobKeeper wage subsidy scheme ends, and claims must be lodged before January 1 next year.

Consumer advocate Super Consumers Australia has described the measure as a “band aid solution” that will see many policyholders lose out once the JobKeeper program expires.

“That doesn’t sound great to me,” Super Consumers Australia Director Xavier O’Halloran told insuranceNEWS.com.au. “Once the JobKeeper scheme is removed, potentially the real risk for consumers falling into those more restrictive terms becomes real because they will be at threat of losing their jobs.”