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Superannuation insurance claims for psychological conditions - 01/07/2021 :: 31/07/2021

Superannuation insurance claims for psychological conditions

Information provided by Maurice Blackburn


Automatic cover for superannuation members

Most super funds provide automatic insurance cover for total and permanent disability (TPD), which will pay a lump sum benefit if you can no longer work due to injury or illness, including a psychological illness such as depression, post-traumatic stress disorder (PTSD), or anxiety disorders.  

Unlike a worker’s compensation claim, the disabling condition does not have to be work related.

This type of superannuation insurance isn't underwritten in the same way as direct insurance policies. It can even cover claims for conditions that existed before the member joined the super fund.

The challenges faced by mental health claimants

Recent research by KPMG shows that almost 25% of TPD claims lodged in Australia in 2018 were for mental health reasons[1]

The rise of mental health insurance claims is partly due changes in community attitudes where psychological difficulties are no longer as taboo as before and a more mature conversation is developing. In fact, each year approximately one in every five Australians will experience a mental illness. That makes mental illnesses the third leading cause of disability in Australia.

More mental health claims have caused insurers to become wary and heavy handed claims assessment tactics like the use of surveillance, interviews with private investigators and requiring claimants to complete weeks’ worth of activity diaries.  This helps to explain why, according to the government regulator, ASIC mental health claims have the highest decline rate, with just under 17% of all mental health claims being declined compared to just 9.7% for physical diseases[2].

ASIC’s investigations also found that many claimants mental health is exacerbated by the claims process, causing them to withdraw their claims.


Claiming your benefits

If you are considering making a TPD claim or are finding the claim process stressful, Maurice Blackburn can we can help.  We are the largest and most experienced superannuation and insurance lawyers in Australia.  We will fight for you through the claims process to give you the best chance of having your claim accepted as early as possible, and seek to ensure that you are treated with dignity and compassion.    

How new laws may cause you to lose your cover

New Superannuation laws[3] mean that from 1 April 2020, members of default super funds will no longer be provided with automatic death and disability insurance if:

-        Your account balance has not been $6,000 or more on or after 1 November 2019; or

-        You are under the age of 25 and begin to hold a new super account from 1 April 2020

What if I ceased work due to injury or illness before my cover ceased?

Even if you lose your cover due to these legal reforms, you will still be able to pursue your TPD entitlements as long as you had insurance when you became ill or injured.

What if I stop work after my cover ceases?

If you cease work due to injury or illness after these changes, you will only be eligible to claim your super insurance if you have cover when you stop work. 

What if I have an illness or injury but haven’t ceased work yet?

For those with injuries or other medical conditions who are still employed because you are ‘soldiering on’ or waiting for your condition to stabilise before deciding whether to permanently cease work, you may lose your cover if you fall within the above changes. 

How can I avoid losing my superannuation insurance cover?

Yes, it is possible to keep your automatic insurance cover by electing in writing that you want to keep your insurance cover, even if your super account balance is less than $6,000.  This must be done by 31 March 2020.

We encourage members who are unsure about their insurance needs to seek independent financial advice about what cover is right for you before taking any of these steps. We can refer you to a reputable financial adviser if you don’t have one.

Maurice Blackburn's superannuation insurance team provide a free check for cover and you can contact them by calling 1800 305 568.


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