The Australian Financial Services Council has announced an initiative to ensure that if people lose their job, are stood down, or have reduced working hours due to Covid-19, this will not affect their total and permanent disability (TPD) cover.
FSC CEO Sally Loane says in a statement that this initiative, which is on behalf of participating life insurance member companies, aims to ease any concerns people may have with their TPD cover by preventing any changes to cover being automatically triggered because of Covid-19.
She says the announcement ensures that “…if you make a TPD claim resulting from an illness or injury occurring since the pandemic has started, participating life insurers will assess your claim based on your working arrangements as at 11 March 2020 – the date when Covid-19 was declared a pandemic – meaning you keep the cover you had based on your working arrangements before the Covid pandemic declaration”.
Loane notes that, for most people, changes to TPD definitions happen only after their working arrangements have changed for six or 12 months (eg to cover parental leave), while for others, this change can happen after three months, depending on the particular policy wording:
“What this means is that some Australians who lost their job, were stood down or had reduced working hours due to Covid, could [have seen] their TPD coverage change from 11 June 2020.
…timed to ensure the initiative is up and running before anyone is adversely affected…
Loane says the announcement has been timed to ensure the initiative is up and running before anyone is adversely affected.
To align with the current JobKeeper Payment scheme, the initiative runs to 27 September 2020 and claims must be lodged before 1 January 2021.
Life insurers will confirm their participation by making a statement on their website.
This initiative follows the Australian FSC life insurers commitment to ensure frontline healthcare workers are not prevented from obtaining life insurance cover with participating life insurers purely because of their exposure, or potential exposure, to coronavirus. (See: Underwriting Announcement -Frontline Healthcare Workers).