A TPD payout is a lump sum equal to the sum insured under your superannuation policy, paid into your super account once the insurer accepts the claim. There is no standard figure. The amount is set by your policy, not by the injury or illness itself.
The short answer
A total and permanent disability payout is a single lump sum. The amount is the sum insured under the policy attached to your superannuation account at the date you stopped work. It is not calculated from your wages, your medical bills or the severity of your condition. Two people with the same diagnosis can receive very different amounts because their policies differ.
Where the money goes
The insurer pays the benefit to your superannuation fund, not directly to you. The fund then adds it to your account balance. You then apply to the fund to release the money on the ground of permanent incapacity. Most people take it as a lump sum, though some funds allow a pension instead. Tax can apply on release, and the treatment depends on your age and your service history, so it is worth taking financial advice before you withdraw.
What sets the figure
- Default cover is the cover your fund gave you automatically. It is often a fixed amount that reduces as you get older.
- Voluntary cover is extra cover you chose and paid for. It is usually a fixed amount that does not scale down.
- More than one fund can mean more than one policy. Each is claimed and paid separately. See Can I claim TPD if I have multiple super funds?
What can reduce it
Outstanding premiums or fees owing on the account can be deducted before release. Some policies also offset other benefits already paid for the same condition. The insurer must set out any deduction when it accepts the claim, and you are entitled to question it.
What a payout does not affect
A TPD benefit is paid under your own insurance and does not depend on fault. It sits alongside any workers compensation, motor accident or public liability claim arising from the same event, though some of those schemes take account of it when they value your loss. We check for overlap before either claim is finalised.
We have written more on how much a TPD payout is and on what a TPD claim is for readers who want the detail.