Why your TPD insurance claim could be rejected
Australians are far more likely to face delays, disputes and rejected claims when making a total and permanent disability (TPD) insurance claim than a death claim, according to new industry data.
Most life insurance claims are paid, but TPD and income protection claims remain the biggest source of disputes, delays and declined payouts.
If you're unable to work due to illness or injury, making a TPD insurance claim may not be as straightforward as you expect.
New data from the Australian Prudential Regulation Authority (APRA), covering the 12 months to June 30, 2026, shows TPD claims are more likely to be disputed, delayed or declined than other types of life insurance claims.
While most life insurance claims result in a payout, the figures highlight challenges policyholders can face when claiming on TPD and income protection cover.
How often are TPD claims paid?
Death claims recorded the highest acceptance rates, with 97% of claims accepted for individual advised policies and 98% for cover held through superannuation funds.
By comparison, TPD claims were accepted at rates of 81% for advised policies and 88% for group super cover.
Income protection insurance, also known as disability income insurance, recorded acceptance rates of 94% for advised policies and 96% for group super cover.
The data shows most claims are ultimately accepted, but TPD claims have lower acceptance rates than other major forms of life insurance cover.
Why are some TPD claims rejected?
One of the biggest reasons TPD claims are declined comes down to eligibility requirements set out in the policy.
According to APRA, failure to meet contractual definitions or eligibility requirements accounted for 80% of declined advised TPD claims and 91% of declined group super TPD claims.
This highlights the importance of understanding exactly what your policy covers and how your insurer defines total and permanent disability before you need to make a claim.
Which claims generate the most disputes?
While most disputes are eventually resolved, TPD and income protection insurance generate higher levels of complaints and disagreements than death cover.
Disability income insurance recorded 326 disputes per 100,000 lives for advised policies and 493 disputes per 100,000 lives for non-advised cover, compared with 98 for group super cover.
TPD insurance also recorded elevated dispute rates across individual policies.
The data showed most disputes were ultimately resolved, with between 81% and 94% resolved across different types of cover. Of those resolved, between 83% and 99% were completed within 45 days.
Why do TPD claims take so long?
The data also revealed significant differences in claims processing times.
Three in four death claims were finalised within two weeks, making them the fastest type of claim to process.
TPD claims were significantly slower. Just 23% were completed within two weeks, while the estimated average time to finalise a TPD claim was 3.9 months.
For people dealing with serious illness or injury, waiting months for a claim decision can place additional financial and emotional pressure on households.
What this means for policyholders
APRA's report provides insurer-level and industry-wide data covering individual advised and non-advised policies, group superannuation cover and group ordinary business.
For consumers, the findings suggest it's worth understanding the definitions, eligibility requirements and claims process attached to your cover before you need it.
While most claims are accepted, TPD and income protection insurance remain the areas where policyholders are most likely to encounter delays, disputes and more complex assessments.
This article first appeared on Financial Standard
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