An injury that ends a career may provide access to several claims at once. Someone working in Sydney may have disability cover under two or three superannuation funds. Income protection, workers compensation, and even government assistance may come into play.
Different payments operate under different regulations, and, as Sydney TPD lawyers often see, each may affect the others in unforeseen ways. Recognising this picture early allows protection of surprising sums of money.
Finding All Policies Which You Might Have
Career changes may lead to super accounts which you forgot about. Each may include TPD cover, with a separate definition and sum of insurance. Two lost accounts may equal two claims.
Accessing your account information through myGov became easier recently. It will show all your super accounts related to your tax file number. Lost payslips and even old employers can provide clues to find superannuation funds which you never thought you had. Finding an account, however, doesn’t prove that the insurance in it is still valid.
Insurance within super can be automatically turned off. At the moment, cover automatically stops after 16 months without any contributions, if the member hasn’t decided to keep it. This rule works independently of the rule, moving accounts with small balances to the ATO. Double-checking each policy’s status within the super fund prevents disappointment of using expired cover.
Income Protection First, a Lump Sum Later
Income protection and TPD provide different assistance, and the sequence in which they operate is important.
All these rules differ for each policy, and many people start receiving income protection while the process of determining their condition goes on. Usually, TPD claims follow after this.
Workers’ Compensation Records Travel With You
Most people first get hurt on the job, leading to a workers’ comp claim. The process of making that claim churns out all sorts of paperwork: medical certificates, capacity reports and sometimes a lump sum settlement.
These documents can have a life of their own, resurfacing later in the form of evidence for a TPD claim. A certificate that says you’re okay to do suitable work might get pulled out by a TPD insurer, and don’t be surprised if they try to contest it. But here’s the thing: a difference in wording isn’t necessarily a slam dunk for you or the insurer. What really matters is the policy terms and getting a full picture of your medical situation. To avoid any confusion, just try to keep your injury description consistent across all claims. It’s an easy way to avoid raising doubts.
Tax, Centrelink and What You Actually Get to Keep
Don’t assume that a TPD payout from your super is automatically tax-free. Moneysmart does a good job of explaining that TPD payments may be taxed, with a rate of up to 22% applying to anyone under 60. Of course, the actual tax outcome depends on a few factors, like your age and the balance of your super fund. And very often, two people with similar benefits end up with completely different amounts.
Centrelink payments are another thing to consider. A lump sum payout can actually affect your income-tested payments, such as the Disability Support Pension. It all depends on your individual circumstances and Services Australia’s income and assets tests. Even how you hold the money can change the outcome.
Before you start spending any of that payout, get some independent financial advice. The choices you make in the first few weeks can set you back in terms of tax costs or affect your Centrelink payments for years down the line.
Questions to Ask Every Fund
Each super fund has its own ins and outs, so it’s a good idea to get them all on the same page. By asking the same questions of every fund, you can get a clear picture of what each one has to offer.
One thing that often comes as a surprise is how a TPD payout can affect life cover. If you’ve got TPD and life cover packaged together, a TPD payout can actually reduce the death benefit. Knowing that upfront can help families plan for the future with a clear head.
If you’re dealing with a career-ending injury, the best place to start is with a single, complete list. Get down everything you’re entitled to: every super fund, every insurance policy, every open claim and every government payment. Having the full picture in one place makes it a heck of a lot easier to handle each separate claim.
