Legal matters Q & A on Income Protection Claims

Tuesday, 9 May 2017 

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CS – Chris Smith/KB – Kerry Byrnes /C1,2,3, etc – Callers 

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Announcer     And now, Legal Matters with Turner Freeman Lawyers: great people; great results; great value.

CS       Some more free legal advice in our Legal Matters segment. 131 873 is the telephone number. Don’t leave it too late! Sometimes people do that and they miss out. But every year, Australians pay nearly 6 billion dollars in premiums; that’s supposed to provide income protection, and total and permanent disability insurance. Now, while you may have a lot of questions about how these policies work, our insurers and our super funds often fail to answer them properly, so you don’t really know what is available to you – what facility you’ve actually connected with. So, today, in Legal Matters, we’ll try and answer some of your questions about income protection and super, total permanent disability insurance. And thanks to Turner Freeman Lawyers and their Legal Matters segment, I have, once again, a $100 Westfield voucher to give away. We’ll give away that voucher to one of our callers between now and 2. And as I’ve mentioned beforehand, Turner Freeman Lawyers provide a range of specialised legal services, including compensation and negligence law; asbestos litigation; superannuation and disability claims; family and employment law; wills and estate, and property law. They’ve got offices in Sydney, Parramatta, Campbelltown, Penrith, Newcastle and Wollongong. Their Queensland offices: Brisbane, Logan, North Lakes, Ipswich, Toowoomba, Gold Coast, Sunshine Coast and Cairns. I’ve got an associate based at Turner Freeman Sydney office today, Kerry Byrnes. Kerry, good afternoon to you.

KB      Hi Chris, how’re you going?

CS       Very, very well. It had nothing to do with you, but just because I was ill the last time you came in, I wasn’t trying to skirt you or get around the topic-

KB      [laughing]

CS       -I was legitimately ill. Now you specialise in total and permanent disability and income protection claims through super policies. Is it standard in any super policy to have both income protection and, uh, permanent disability cover as well?

KB      The most common three types are death, TPD and income protection – income protection is the least common of the three; death the most common of the three. But yeah, usually, there’s some combination of those three types.

CS       And in terms of the coverage, does it change depending on what might be in your super fund?

KB      No, it often is determined by age, so the younger you are, it’s more likely that you will have a large amount of insurance – the closer you get to retirement age, sometimes the smaller the amount of insurance can get. But it very much depends of the policy, because sometimes it might be for a fixed amount – so it might be that you always have, for example – this is just a round figure; you might always have $100,000, but when you’re 25, you might be paying a much smaller premium than when you’re 60.

CS       Right. Is it easy to find out the details on how much you are covered by? Like, for instance, I’d like to know what I’m covered for in TPD or income protection. Do they answer those questions easily?

KB      Sometimes, um, you can have a look at your statement which you would probably receive once or twice a year, and that will give you some indication, but sometimes it can be a little bit tricky to read those kind of things, and you might be like: “well, is it both death and TPD? Or is it one or the other? How does the income protection come into it as well?”

CS       Okay. What exactly is income protection in the context of a superannuation policy?

KB      So it’s a type of insurance that covers people if they are totally and temporarily incapacitated for work. So that might be they’ve hurt themselves in some way, they’ve been in a car accident or they’ve fallen over-

CS       It doesn’t have to be work related?

KB      Doesn’t have to be work related, that’s workers compensation which is something totally different, but it might be that they’ve come down with cancer, or multiple sclerosis, or some other nasty depression, anxiety, all of those kind of illnesses, and if they’re totally and temporarily unable to work as a result of that injury or illness, and they have the cover, then it might be that they should make the claim in relation to that.

CS       Okay. Let’s go to some callers, 131 873. I still have a few questions related to that to ask, and well do that after we hear from Wayne. Go ahead, Wayne – I’ve got Kerry sitting right next to me.

C1       Yeah, hi, Kerry.

KB      Hey, Wayne.

C1       Umm, I’ve had a really bad experience quite a few years: I was with one certain superannuation and whether I signed up or not – I really can’t remember – but it was a few years ago, and I had the TPD, I had the death cover, and I also had the income protection. Well, I thought I was doing the right thing, never ever claimed anything at all – and what the company, my company, employer, was putting in after quite some time, I’d had no correspondence, um, all of a sudden I get a letter saying there’s nothing in my super – they’ve took everything – everything was taken out by all these deductions. These three deductions were killers; they just…they took all my super. So I’ve basically started again with someone else and I don’t know what to do about it-

CS       How- this is a good question for Kerry – how…does it work that way, Kerry? Or could there’ve been other reasons why that money was empty?

KB      It sounds a little bit unusual that they will have emptied the whole super fund out, because usually – not always – but usually, they try and price these kind of things so that they’re relatively cheap; especially because they will – um, they’ll sign it up to the whole membership. So it might be – and I’m just…I don’t know who you’re with, Wayne, but for example, if you’re a construction worker, you might be with Cbus – and so all of the members of Cbus will be covered; and so they’re able to give a relatively low premium in that circumstance. It might be if yours was a little bit more specialised than that, it might have been treated differently – but in terms of them taking all of the money out, that might be something that you want to have a look into – possibly get a financial advisor onto as well, because it seems a bit unusual that they will have taken out very large amounts of money that, as I say, they’re usually quite modest premiums-

CS       Have you had someone look across those details, Wayne?

C1       No, I was pretty upset about it, and a couple of years ago this was and um – when you lose everything and it’s all because you’re paying these fees – they were an exorbitant amount of fees, I thought. You know, in total, it was something like 600 a month, or something, with the whole 3 of them. They were really expensive, and I don’t…it just left a bad taste in my mouth and I just – I’ve went to 0. I didn’t have a real lot in there, but this took everything, so I was pretty upset about it and I-

CS       Maybe a financial advisor needs to make a call on your behalf and try and speak in their language to sort it out.

KB      That seems a little but unusual – I mean, they can be a really valuable type of insurance cover to have, but you don’t necessarily want it to be at the expense of your actual super.

C1       I’ve got nothing now, so no cover.

KB      That’s not good at all, Wayne

C1       No, no. Anyway…

CS       Good luck, Wayne. Thank you very much for that. Leslie, go right ahead.

C2       Yeah, hi. Look, I’ve got a granddaughter who…came to understand that her superannuation hadn’t been paid for 12 months. She contacted superannuation organisation; they said, “yes, it hasn’t been paid”, and as a result her insurance had slipped. She took it up with the employer, and as a result of that she was bullied, and left the organisation after the realisation. We’ve now got a young lady who’s just recently moved into her own home, um, her and her husband – and he’s suffering from quite severe depression as a result of everything gone on. Um, the bullying was quite bad, but has she got a claim in regards to the insurance not being paid? Or where should she go for that?

KB      So, um, if you’re – did you say that her super wasn’t being paid, or that her insurance.

C2       Yeah, they didn’t pay her superannuation. She contacted the taxation department – they confirmed it hadn’t been paid for 12 months. As a result of that, taxation department contacted the employer because they were in default. They didn’t like the fact that she’d done that – and as a result, they’ve really made her life quite difficult, and she left it – left the company.

KB      Yeah. In terms of if she can get the insurance premiums paid, that would probably be something I would need to have a look into. It’s a really good question, but I would probably need to have a bit more of a look into that. Is your granddaughter being fairly affected still by this bullying experience that she had?

C2       We can’t get her to work; we can’t even get her behind the wheel of a car, and she’s under a psychologist-

KB      Yeah-

C2       Um, yeah, not in a good place at all.

KB      It might be that you and I could have a chat off air, Leslie, but it sounds like there might be some other types of claims that she might be more eligible for, rather than going down the superannuation path. It’s fantastic as far as it goes, but if she doesn’t have the cover, then it might be that she wants to have a look at another type of claim instead.

CS       Leslie, stay on the line; I’ll put you back to Hansel and we’ll try and get you in contact with Kerry, maybe after the program. Thank you very much for your call. It’s 11 to 2 – we’ll come back with Kerry Byrnes and Turner Freeman: Legal Matters segment.

CS       Matt Preston will join us next half hour on the program. We’ve got a chance for you to get into the draw to win tickets to see Petula Clark. And today now, travel segment, we’re talking all things Disney – some great deals through Hello World on Disney, so we’ll get to that next hour on the program. We’re talking total and permanent disability insurance and income protection attached to your super policy. We’ve got a question here from Maria. Maria – go right ahead, Kerry is listening.

C3       Oh hi, Kerry. I’m Maria.

KB      Hi, Maria

C3       I have 5 children who are currently all working in a part time Maccas workers, et cetera. They all obviously, due to that, have been put in super funds, and they are totally unaware that they end up – I guess – opting in for insurance covers, instead of being a choice to uh…like I feel like that they’ve been put in it automatically without them even knowing. Consequently, the premiums keep coming out of their funds, obviously, otherwise they wouldn’t have the cover. So most of these young kids have no idea that they’ve even opted into this, and I feel like the insurance companies have, in a way, got around it, because obviously these covers are – one of them’s…one of the only things you can pay for out of your super fund-

CS       This is really good – this is a really good aspect to this superannuation policy legal framework. Things have changed, right, Kerry?

KB      That’s right – so it used to be an opt-in system. Now it’s an opt out system, so the idea behind it is that people, generally, are really under insured and if bad things happen, then they’re not covered and they have to, like, rely on Centrelink – which is, you know, very low cover, and it’s not a really great situation to be in. In situations like with your children where they are kind of automatically included and they would need to opt out, it might be – sometimes you’ll also find with young people, if they go between multiple jobs, they must end up with multiple super funds and membership of a whole bunch of different funds – so one thing that they can do is try and consolidate their super so that they’re only paying one lot of the insurance premiums. Sometimes it’s a good idea for them to get advice about that, either from a financial planner or from a lawyer, just to make sure-

CS       But they can also opt out, right?

KB      Oh, they can opt out, absolutely. But, you know, the question will then just be: is it more difficult to opt in later in the event that something bad happens-

C3       Yeah, or they forget about it.

KB      Yeah, exactly right, which so often happens, you know.

CS       Maria, I’ve got a $100 Westfield voucher for you and all your 5 children.

C3       Oh, thank you very much! [laughing]

CS       [laughing] It’s only $20 each when you consider 5 children, and less if you’re included.

C3       Oh well, thank you-

CS       I’d just take it myself!

C3       -at Maccas, they might serve you!

CS       Yeah, [laughing] good! Maria, just take it yourself, come on, don’t tell them!

C3       Oh yeah, I won’t tell them, I won’t tell them, yeah [laughing]

CS       $100 Westfield voucher coming your way, Maria.

KB      Thanks, Maria.

C3       Oh, thanks very much, Chris. Thank you.

CS       All right, thank you very much for that. Now I had a call from Ian – I’ve only got 30 seconds, I won’t take his call, but he wants to ask about veterans’ superannuation. I think it’s probably a matter of him asking questions of those, uh, he’s with.

KB      Yeah, veterans’ super’s treated a bit differently. It’s usually not a separate insurance policy like most of these others types are. It’s usually more of a defined benefit scheme, so they might be able to get, um, some sort of cover, but not separate insurance cover, if that makes sense.

CS       Yeah, okay, good – Ian, thank you very much for your question. Kerry, thank you very much for taking calls today.

KB      My pleasure, thank you.

CS       Kerry Byrnes from Turner Freeman in our Legal Matters segment.