Consumer group Choice has questioned the value of total and permanent disability (TPD) insurance inside superannuation, arguing that it can often be “junk” insurance.
The consumer group has published an article in which it effectively accuses insurers of using the activities of daily living (ADL) test to eliminate some claims and urges consumers to discover whether they will face the standard test or the ADL test.
It said it was extremely difficult to succeed in a claim where the ADL test applied “so for some people this makes the insurance junk”.
The consumer group claimed one of the main ways insurers created junk insurance was through the “hazardous occupations” or “special risk” list.
It said many of the documents provided by superannuation funds and insurers were very long and cited AMP’s insurance guide which it said spanned 95,000 words making it much longer than the first Harry Potter novel.