Several updates were made to the TPD definitions in response to the UCT changes.
Other updates were made in response to ASIC’s Report 633.
In October 2019 ASIC released their report 633 ‘Holes in the safety net: a review of TPD insurance claims’. The Report focused largely on Group insurance contracts in superannuation and one of the findings in this report was the poor outcomes for customers that were assessed under a restrictive TPD definition that relied only in their inability to perform ‘Activities of Daily Living (ADL)’. This ADL test reflects a severe physical disability and is especially hard to meet for those suffering from mental illness.
Priority Protection, like many retail products, doesn’t have a TPD definition that relies solely on an ADL test. Our more restrictive definitions are based on ‘Loss of Independence’ that considered the ADL test, and also considers Cognitive Impairment or Loss of Use of Limbs and/or Sight.
We have taken on board ASIC’s finding and made improvements to make it easier for those who suffer mental illness to meet the claim requirements, as well as improving the overall outcome for customers.
The changes impact the following TPD products:
- Total & Permanent Disablement (Loss of Independence), generally available to high risk manual occupations on Occupation Category E.
- Universal TPD, available to those that do not meet the work requirements for TPD.
- Total & Permanent Disablement (Home Duties), available to those that perform full time domestic duties
These products were improved as follow:
- For both TPD (Loss of Independence) and Universal TPD, the benefit is paid when the insured meets ‘Total and Permanent Disablement (Universal)’ definition. The Total and Permanent Disablement (Universal) has been expanded to cover when the insured suffers from Mental Illness (severe and permanent), Motor Neurone Disease, Hemiplegia, Paraplegia or Quadriplegia, as well as Loss of Independence.
- The definition of TPD (Home Duties) was also expanded to include when the insured suffers from Mental Illness (severe and permanent), Motor Neurone Disease, Hemiplegia, Paraplegia or Quadriplegia.
- The definition of ‘Loss of Independence’ was updated:
- Reducing the period required to meet the definition based on ‘Activities of Daily Living’ to 3 months, and
- Removing specific tests from the requirements to meet the definition of ‘Cognitive Impairment’.
- Mental Illness (severe and permanent), Motor Neurone Disease, Hemiplegia, Paraplegia or Quadriplegia are defined medical terms.
- Conversion to Loss of Independence for TPD and Crisis Recovery continues to cover only ‘Loss of Independence’.
- Universal TPD converts to Loss of Independence at age 70, and continues as a Loss of Independence benefit until age 100.