Thousands at risk of dud insurance in their super as they lose work due to coronavirus

Hundreds of thousands of Australians could soon be exposed to dud insurance through their superannuation funds.

Highly restrictive definitions of disability for the unemployed, casual, contract and part-time workers have seen many people denied insurance payouts for years.

Carolyn Jenkins is one of them, having been knocked back for a $190,000 claim against the total and permanent disability (TPD) insurance policy she had paid for through her super fund.

“It’s the difference between keeping your home and buying your medications,” she told ABC’s The Business.

Ms Jenkins has not been able to work for the past year because of an auto-immune disease.

“Over the last 12 months I’ve been borrowing money from family just trying to buy my medications.”

What is the activities of daily living test, and why should you care?

It is a crisis thousands more Australians may soon face due to the COVID-19 pandemic and the recession it has caused.

To understand why, you first need to know how most insurance policies in super work — particularly something called the “activities of daily living test”.

“It actually requires that the claimant be permanently unable to feed themselves, wash themselves or dress themselves,” Ms Jenkins’ lawyer, Josh Mennen from Maurice Blackburn, explained.

So difficult that Xavier O’Halloran from Super Consumers Australia said the majority of claimants fail, according to figures recently compiled by financial regulator ASIC.

“So these are very difficult tests to satisfy.”

Not everyone has to satisfy the activities of daily living test — most people only have to provide medical evidence that they are no longer fit to perform the type of work they were engaged in before their accident or illness to successfully claim.

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