Definitions in the wording of total and permanent disability (TPD) cover in insurance policies need immediate clarification by insurers and super trustees, an insurance law expert said.
The latest NSW Supreme Court decision in the case of Mabbett v Watson Wyatt Superannuation and Anor highlights the need to address the confusion surrounding the definition, according to TurksLegal partner Alph Edwards.
Edwards said the Court confirmed that the correct time period for assessing the likelihood of an applicant's future return to work is six months after leaving a job due to injury or illness.
A previous judgment suggested that the correct period commences from the date when the insurer assesses the claim.
"This decision throws out the challenge for life insurers and super trustees to think about the words they use in their group life policies and make the necessary changes to make it absolutely crystal clear exactly how you go about assessing TPD, including this time issue," Edwards said.
He said that unclear language in insurance policies makes it harder and in the long run more costly for insurers and trustees, which eventually imposes unnecessary costs on consumers.
