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Mental Health Surpasses Other Causes in TPD Claims, Doubling Payouts Over Five Years

Mental Health Surpasses Other Causes in TPD Claims, Doubling Payouts Over Five Years

Mental Health Surpasses Other Causes in TPD Claims, Doubling Payouts Over Five Years?w=400
Recent findings from the Council of Australian Life Insurers (CALI) reveal that mental health issues have become the primary cause of Total and Permanent Disability (TPD) claims.
Insurers disbursed nearly twice the amount for such claims in 2024 compared to five years prior.
This data originates from the CALI and KPMG's Cause of Claims Results Report, highlighting a significant shift in the nature of insurance claims.

In particular, the report noted that life insurers paid out over $2.2 billion for retail mental health claims, with TPD claims due to mental health issues representing a third of the total claims. Additionally, mental health issues comprise 20% of income protection claims, leading to payouts totalling $887 million in 2024 alone.

This trend reflects a broader trajectory first identified by the council in the previous year. According to the Australia’s Mental Health Check Up report by KPMG, there has been a staggering 732% increase in permanent disability claims among individuals in their 30s, with 36% now attributed to mental health conditions—a sharp rise from just 10.1% in 2013.

Christine Cupitt, CALI's chief executive, expressed concern over the increasing pressure on the safety net, including life insurance. She highlighted that while lump sum payouts offer immediate relief, they might not ensure long-term financial security, particularly for younger individuals with many years left in their working lives.

Cupitt remarked, "Australia is reaching a tipping point. Every year, more young Australians exit the workforce permanently due to mental health issues. It's troubling that these individuals often have to classify themselves as totally and permanently disabled, even when medical evidence suggests they could potentially return to work."

She further emphasized the need for systemic changes to cultivate a community more resilient to mental health challenges. While insurers remain committed to supporting those most affected by mental health conditions, there is an ongoing effort to reevaluate and improve customer service strategies for the future.

Published:Monday, 14th Jul 2025
Source: Paige Estritori

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Knowledgebase
Term Life Insurance:
A form of life insurance that is a pure protection policy with no cash or maturity value which lasts for a specific length of time, called a term.