A TPD payout from a superannuation fund involves more than establishing an insurance entitlement. Veterans and families also need to understand the requirements for accessing the money and any effect on other payments.
Private TPD insurance and military invalidity benefits are different arrangements. A CSC invalidity pension is not simply a private TPD payout under another name.
What happens when the insurer accepts the claim
For insurance held through super, the benefit is generally paid into your superannuation account. Before releasing money to you, the trustee must be satisfied that you meet an applicable condition of release. Insurance approval and access to your super are separate assessments.
Ask your fund for a breakdown distinguishing the insurance benefit from your existing super savings, together with information about any tax on a proposed withdrawal. Obtain personal financial and tax advice before deciding how much to withdraw or how to use it.
How this differs from CSC benefits
MilitarySuper, DFRDB and ADF Cover have their own invalidity arrangements. These assess eligibility and incapacity for civilian employment under the relevant scheme rules. An entitlement under one of these arrangements does not, by itself, establish entitlement under a separate TPD insurance policy.
Veterans may hold separate insurance through civilian employment, another superannuation fund or a policy outside super. Eligible former ADF members with ADF Super may also have lifePLUS Protect insurance, which can include TPD cover. This is separate from ADF Cover invalidity benefits.
What about DVA payments?
DVA’s MRCA guidance states that payments received from private insurance matters do not affect entitlement to permanent impairment or incapacity compensation under the MRCA. Those private insurance payments are not generally offset against these benefits.
That guidance should not be treated as confirmation that every DVA or income support payment is unaffected. Before withdrawing or spending the money, obtain advice about the particular payments you receive, including any means-tested benefits.
It is also important to distinguish the private insurance benefit from any military superannuation benefit being considered. Give your advisers the relevant decisions and payment breakdowns rather than describing every payment simply as a disability payout.
Planning the next steps
Keep the insurer’s decision, the fund’s release documents and a list of your other payments together. Ask for an explanation before signing withdrawal instructions if you do not understand the calculation or proposed tax treatment.
KSC Law can help clarify your claim and identify legal issues relating to a superannuation TPD payout. Where tax or personal financial decisions are involved, obtain advice from an appropriately qualified adviser.
Related reading: How much is a TPD payout · TPD claims for veterans and ADF members
Further reading
Moneysmart — TPD insurance · ATO — Early access to your super · DVA — Support when you can’t work