Category: Exclusions
Pre-existing conditions are handled in two structurally different ways. Retail TPD cover is individually underwritten at application, so each condition is assessed and reflected in your offer terms. Default group TPD cover inside super instead applies blanket 'pre-existing condition' or 'limited cover' clauses for an initial period.
The IMFL retail panel is AIA, Zurich, TAL, OnePath, ClearView, NEOS, Encompass, Acenda and Futura. The legal anchor for the application duty is the Insurance Contracts Act 1984 (Cth).
When you apply for retail TPD you complete a personal statement covering medical history, occupation, pastimes, family history and income.
Under section 20B of the Insurance Contracts Act 1984 (Cth), inserted by the Insurance Contracts Amendment Act 2013, you have a duty to 'take reasonable care not to make a misrepresentation' to the insurer before the contract is entered.
Based on what you disclose, the underwriter returns one of four outcomes:
A disclosed condition that is loaded or excluded is on the schedule for the life of the policy. It is the gate that determines whether a future claim is paid.
See what should I do before applying for TPD insurance for the disclosure process and why so many TPD claims are rejected for what happens when prior disclosure does not match the claim history.
Most super funds offer default group TPD cover without individual underwriting, up to an Automatic Acceptance Limit (AAL).
The trade-off is a 'limited cover' or 'pre-existing condition exclusion' clause that runs for an initial period (commonly 12 to 24 months; read your fund's insurance booklet).
During that period the policy only pays claims arising from new events, not conditions that existed before cover commenced. Once you have been in active employment for the prescribed period without medical absence, the policy converts to full cover.
Members who voluntarily increase default cover above the AAL get underwritten by the fund's group insurer at that point. The retail four-outcome model then applies to the increase.
A pre-existing condition is a sickness, injury, symptom or condition that you were aware of, or that a reasonable person in your circumstances could be expected to have been aware of, before cover started or was reinstated.
Acenda Insurance (PDS 27 September 2025, page 59) captures it as: 'sickness or injury that first appeared, happened or was diagnosed, and which you were aware of or a reasonable person in your circumstances could be expected to have been aware of, before your Total and Permanent Disability insurance or Critical Illness insurances started or was last reinstated (unless disclosed to, and accepted by, us as a part of the application or reinstatement process).'
At claim time the insurer requests:
If the medical record shows the condition existed and was not disclosed, the insurer may rely on its Insurance Contracts Act remedies. Remedies range from varying cover to the terms that would have applied had the duty been met, through to avoiding the contract from inception in cases of fraudulent misrepresentation.
The rule is the same across the nine retail PDS: if in doubt, disclose. The underwriter decides whether the disclosure is material.
APRA's Life Insurance Claims and Disputes Statistics (reporting period ending 30 June 2025) show advised TPD acceptance at 82.88%, materially higher than the 69.88% non-advised rate. Meaningful disclosure at application is one of the biggest reasons.
See how TPD differs across the panel of Australian insurers for how appetite for specific conditions varies, and what is TPD insurance for the broader product context.
The PDS for your specific cover defines exactly how pre-existing conditions are treated on your policy. If there is any conflict between the PDS, the policy schedule and the application, the contract documents prevail.
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