Most superannuation funds offer total and permanent disability cover (TPD) to support people who became permanently disabled and are unable to work again.

But research shows that over one third of those who make successful claims on TPD recommence their working lives.

“A study by SunSuper showed that 36 per cent of successful TPD claimants were returning to work (or actively seeking employment) following recovery from their disability. Other funds report similar results without the same detailed analysis carried out by SunSuper,” said a new report from superannuation consultants Rice Warner on disability insurance in super.

Nathan Bonarius, research chief with Rice Warner, told The New Daily the figures indicated that “over one third of people whose claims are paid out go back to work. It indicates that some policies need to be better designed.”

Revised definitions would tighten criteria used to determine whether injured or ill people are likely to be able to work again.

Kim Shaw, superannuation insurance partner with plaintiff lawyers Maurice Blackburn, told The New Daily “on the face of it that statistic seems high but most TPD policies don’t require that people don’t have the capacity to ever work again to make a successful claim.”

“They usually stipulate that you can’t work again in areas where you have the requisite education, training and experience,” Ms Shaw said.

Philippa Heir, a lawyer with the Consumer Action Law Centre, said “the figure of 36 per cent of people receiving TPD claim payouts doesn’t imply that they are getting payments incorrectly.”

“You could have someone injured as a builder who gets a payout, studies law and becomes a lawyer,” Ms Heir said.

TPD insurance helps cover the costs of rehabilitation, debt repayments and the future cost of living for people who become incapacitated. Claims are sometimes not paid in full but are awarded a per centage of their claim.

Some only got a fraction

Research from SuperRatings showed nearly half of the super funds assessed paid out between 71 per cent and 90 per cent of TPD claims between July 1, 2015, and June 30, 2016. Almost 30 per cent of claimants had 91 to 100 per cent of their claims paid, Fairfax Media has reported.

Maybe your barrister used to be your builder. Photo: Getty

SuperRatings did not provide data on claims that were knocked back completely, but its research showed that slightly more than one in 10 claimants received 60 per cent or less of their claim payout. Often partial claim payments can occur where matters go to court and there is a settlement.

TPD policies in super are generally are designed to provide enough money to make up for the superannuation contributions incapacitated people would miss out on through a truncated working life. “About 70 to 80 per cent of people making claims are members of industry funds and payouts tend to be between $50,000 and $200,000,” Ms Shaw said.

White collar payouts are larger

Highly paid white collar workers can be liable for more with members of Legal Super typically getting TPD payouts of between $350,000 and $400,000, she said. Lump sum payments can either be taken and used immediately or rolled into a super fund for use in the future, she said.

Use your TPD claim to retrain. Photo: Getty

SunSuper has used its research to design a new product that makes six equal payments over five years to fund rehabilitation and retraining. Payments are stopped earlier if claimants are able to return to work. SunSuper says the new policy cuts premium payments for combined death and TPD policies by about 15 per cent.