Why TPD Claims Get Rejected (And What to Do If Yours Is)

📊 TPD is the most disputed insurance category🔗

ASIC's landmark Report 633 reviewed tens of thousands of TPD claims and found decline rates that should make every Australian with a super account pay attention.

These aren't abstract numbers either, they map closely to the most common TPD claims in Australia, the conditions people actually claim for are often the same ones running into the strictest definitions.

⚖️ The definition problem🔗

Most Australians with TPD cover have no idea which definition applies to them. "Own occupation" is the most generous, you can't do your specific job, but it's increasingly rare inside super. "Any occupation", the standard definition in most super funds, requires you to be unable to do any job you're reasonably suited to, a much higher bar.

The Activities of Daily Living (ADL) test, common in older direct policies, requires you to be unable to perform basic tasks like bathing, dressing or eating without assistance. It was designed for severe physical disability, not chronic pain, mental illness or neurological conditions, which is exactly why decline rates under this definition run so high.

Find your policy documents and identify which definition applies to you before anything else, it's usually in the Product Disclosure Statement under "TPD definition" or "when you're covered." Our plain-English TPD explainer covers each definition in more detail.

🔍 The most common reasons claims get rejected🔗

• Insufficient medical evidence. Insurers want objective, documented evidence from treating specialists, not just a GP letter.
• Non-disclosure. An undisclosed pre-existing condition relevant to your claim can reduce or void the payout, even if it didn't directly cause your disability.
• "Any occupation" interpretation. Insurers often commission their own independent medical examination (IME), and its conclusions can conflict with your treating doctors.
• Direct policy pitfalls. Direct policies are more likely to use ADL definitions and stricter underwriting than group super policies.
• Waiting period and employment requirements. Some policies require continuous employment for a minimum period before disability occurred, and claims outside that window can be rejected on procedural grounds alone.

🪜 What to do if your claim is rejected🔗

1. Get the rejection in writing and read it carefully. You're entitled to a written explanation, including which policy clause is being relied on and what evidence is said to be missing. If the insurer commissioned an IME, request a copy.

2. Lodge an internal dispute resolution (IDR) complaint. Every fund and insurer must have one. Write a formal complaint, include your claim reference, the rejection letter and your supporting evidence. Funds generally have 45 days to respond, up to 90 in limited circumstances.

3. Escalate to AFCA. If IDR doesn't resolve it, or the fund doesn't respond in time, the Australian Financial Complaints Authority is free, independent, and its decisions are binding on insurers and funds. Time limits generally apply, within 2 years of the insurer's final IDR response.

⚖️ What AFCA actually does with TPD disputes🔗

AFCA reviews documents from both sides, may request more information, attempts conciliation first, and issues a binding Determination if that fails. It can overturn a rejection, order the claim be paid, or award compensation for delays and poor handling. It won't always side with the claimant, but it applies the law and policy terms independently of the insurer's own conflict of interest.

You can search AFCA's published decisions at afca.org.au to see how similar cases were decided.

❓ Frequently asked questions🔗