New research highlights mental health discrimination by super funds

PIAC has joined with Super Consumers Australia to call on super funds and insurers to stop discriminating against people who have mental health conditions.

Research released by Super Consumers in early July found that Australia’s biggest superannuation funds are seeking to limit claims under total and permanent disability (TPD) by people who may be unemployed or work limited hours, by using unduly restrictive definitions. These definitions apply an ‘activities of daily living’ (ADL) test to assess ability to work, which makes it much harder to claim for mental health conditions.

To successfully claim on a policy that uses an ADL test, a person must show they can’t do two basic physical activities such as speaking, walking, eating, dressing or using the bathroom. This test is inappropriate for measuring a person’s ability to work when they have a mental health condition.

‘The practical impact is people with a mental health condition can’t claim on this insurance when they need it most’, says Super Consumers Australia director Xavier O’Halloran.

PIAC has long held concerns about insurance discrimination against people with mental health conditions. ‘Excluding people from protection because they have a mental health condition is unacceptable,’ says Senior Solicitor Ellen Tilbury.

‘We’ve seen insurers do it before by imposing overly broad mental health exclusions on life insurance policies. The use of ADLs is another attempt to deny adequate cover to people with a mental health condition,’ Ms Tilbury says.

In an October 2019 report, ASIC found that claims assessed using an ADL test are 5 times more likely to be rejected, and that 77% of mental health claims were rejected when an ADL test applied.

The Financial Services Council and its members have agreed to temporarily waive discriminatory terms until 1 January 2021 due to the global pandemic. PIAC and Super Consumers are calling for these terms to be removed altogether.

More info: Super Consumers Australia.

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