Does my prescription affect a TPD claim?

What the law actually says

A TPD entitlement is created by an insurance policy and a trust deed, not by statute, and it turns on the definition that applies to you — commonly any occupation, own occupation, or an activities-of-daily-living test. There is no Act that says what those words mean.

But if the cover is held inside superannuation, which most TPD cover in Australia is, a second and statutory test sits behind it. Money cannot leave a fund unless a condition of release is met. Item 103 of Schedule 1 to the Superannuation Industry (Supervision) Regulations 1994 (Cth) makes permanent incapacity a condition of release, with a cashing restriction of Nil — meaning that once it is met, the benefit can be taken in full rather than only as an income stream.

Regulation 1.03C defines it, and the wording repays reading closely. A member is taken to be suffering permanent incapacity if a trustee of the fund is reasonably satisfied that the member's ill-health (whether physical or mental) makes it unlikely that the member will engage in gainful employment for which the member is reasonably qualified by education, training or experience.

Four things in that sentence do work:

• The decision-maker is the trustee, not the insurer. They are different parties with different duties, and a trustee is not bound to agree with an insurer.
• The standard is reasonably satisfied — an administrative judgement on the evidence, not a medical certainty.
• Ill-health, physical or mental, is the trigger, without distinction between them.
• The employment yardstick is what you are reasonably qualified for by education, training or experience — which is the statutory cousin of an any occupation clause, not of an own occupation one.

Section 62 of the Superannuation Industry (Supervision) Act 1993 is the reason the statutory test exists at all: the sole purpose test requires a trustee to maintain the fund solely for the core purposes, which are retirement, age and death benefits. Insurance inside super is permitted because it serves those purposes — which is why it is tied to defined conditions of release rather than to whatever a policy says.

Where does the prescription sit in that? On both sides. It is contemporaneous evidence of a diagnosed condition, its severity and the length of the treatment history — which is what a claimant usually needs to establish. It is equally available to an insurer as evidence that the condition is being actively managed, which is an argument about unlikely. Which way it cuts is a question about your file, not about the medicine.

What happens if it goes wrong

Read which definition applies to you before you lodge, and read it in the policy document rather than the product summary. An own occupation claim and an any occupation claim are different cases assembled from different evidence, and the statutory permanent-incapacity test is closer to the second.

Expect the two decisions to be made separately and possibly to disagree. An insurer accepting a claim does not by itself release the money; the trustee must still be reasonably satisfied under reg 1.03C. A trustee's separate decision is also a separate thing to complain about if it goes against you.