A totally and permanently disabled woman who had TPD insurance did not make a claim for four years because she thought it would erode her superannuation balance and jeopardise her eligibility for the disability pension, a group insurance executive told the Investment Magazine Group Insurance Summit at the Four Seasons, Sydney.
Trudy’s story emerged when Jenny Oliver, general manager for group insurance at TAL, began a research project surveying thousands of claimants to uncover why it was taking members an average of two years to lodge their TPD claims after they were disabled, and what insurers could do to help them get their money sooner.
Contrary to Oliver’s expectations, the survey found that out of six key possible reasons members delayed claiming, “I wasn’t aware my policy would cover my situation” and “I didn’t know how to claim” were the least common answers – at 26 per cent and 22 per cent of respondents, respectively.
At the top of the list was “I was not in the right frame of mind” at 46 per cent, followed by “I had other priorities at this time”, “I was planning on returning to work” and “there was a waiting period”, at 32 per cent, 28 per cent and 27 per cent, respectively.
“I had some preconceived ideas about why it was taking as long to claim as it was,” Oliver told the summit. “The research proved me wrong.”
When Oliver asked Trudy if anyone had questioned if she had TPD insurance at the time she became disabled, she replied that she had been asked, but she knew she was “good” because she had a life policy in her super.
When Oliver asked more questions to understand what she meant, it turned out Trudy thought her superannuation balance was her life insurance balance, and that this balance would pay for her funeral when she died.
She was also concerned that if she made a claim and it was rejected, she wouldn’t be able to claim the disability pension.
“The barriers were immense and really quite emotional for her,” Oliver said.
Members who became disabled would often initially be focused on their health and recovery, Oliver said, while drawing on their own resources and their sick leave. Often they were planning on returning to work and were not considering the prospect of total and permanent disablement, she said.
Later, rising financial pressure as their condition continued or deteriorated led them to begin the claims process.
“This was an interesting insight for me, because I know as an industry we’ve been spending a lot of time…making the claims process quicker,” Oliver said.
There are opportunities for insurers to look at the period before members claim, she said.
Key influencers in helping members make the decision to claim were healthcare professionals at 83 per cent, family and friends at 68 per cent, and the employer or employer’s HR department at 41 per cent. Members’ accountants and lawyers were at the bottom of the list, at 12 per cent and 8 per cent, respectively.
“The people they trust are the ones, at the moment, whom we see as having the real opportunity to help suggest the claims process and suggest the opportunity there,” Oliver said.
Darren Wickham, general manager of group life product and pricing, investments and retirement incomes at TAL, said there was a range of misconceptions among claimants.
“There is still a misconception…among some lawyers and some advisers, that it’s better to delay…a TPD claim until you have had your workers compensation first,” Wickham said.
“Another potential factor is this misconception around Centrelink and the assets and income test, and there’s a concern that if you claim your benefit through superannuation that will jeopardise your disability support pension.”
This may have been the case in the past but the rules had moved on, Wickham said, while still recommending members get advice to clarify the details.
Insurers could consider contacting members proactively, informing them of their ability to claim, and supporting them through the process, Wickham said. Later this year, TAL will publish a study about using artificial intelligence to identify data patterns pointing to members who may be able to claim, he said.