Patrick's comments on the recent TPD ruling. By: Patrick Lim High Court draws distinction with policy-holders who are totally, permanently disabled By K.C. Vijayan (vijayan@sph.com.sg) TPD or not TPD - that was the question before a High Court judge. TPD is 'Total and Permanent Disability', and a standard clause in life insurance policies here. But how it is understood and applied came up before Justice Woo Bih Li in an appeal pursued by insurers NTUC Income. In a judgment published yesterday, he overturned a lower court decision which held that stroke victim Chiang Soong Chee was entitled to a full policy payout. In doing so, Justice Woo drew a distinction between policyholders who become disabled but are able to find work later and those who are permanently disabled. Mr Chiang's life policy provided for a full payout if he was unable to do any work or be a wage earner. His sum assured was $150,000. In July, a district judge had ruled in favour of Mr Chiang, 53, holding that he was entitled to the full payout, since his stroke prevented him from doing the work that he did prior to the injury. But Justice Woo ruled that such a broad interpretation would mean, for example, that a surgeon will get a full disability payout if his dominant hand were to shake slightly so that he can no longer serve as a surgeon, 'even if he could have an equally lucrative career as a banker'. Premiums would go up if this was allowed, among other things, Justice Woo said. Mr Chiang's stroke in March 1992 paralysed his left limbs. In August 2001, he was certified as permanently disabled by two doctors and NTUC Income agreed to pay him four instalments of $15,000 each. But in September 2005, before the balance of $90,000 was due, the insurers asked his doctor, Dr Tong Hoo Ing, to check his current condition. Dr Tong certified that while Mr Chiang was not totally and permanently disabled, he was unemployable because he still carried a limp and had poor short-term memory. But NTUC Income decided not to pay him the remaining $90,000, holding he was no longer totally and permanently disabled. Mr Chiang then sued. A partner in a family-run firm, Sai Sia Paint, he was paid an average $6,000 a month, supposedly as post-disability allowance by his siblings. But Justice Woo found that Mr Chiang's work involved certain responsibilities and that Mr Chiang had not established that 'he was unemployable in the strict sense'. NTUC Income, arguing its appeal through lawyers N. Sreenivasan and P. Sundararaj, yesterday said the ruling restored common interpretation, understanding and application in relation to what is meant by TPD. NTUC Income's chief executive Tan Suee Chieh said the insurers were 'pleased with the decision', stressing the issue was one of principle. NTUC Income was thus not asking for costs. The insurer paid out more than 500 TPD claims this year, amounting to more than $20 million. Justice Woo called for insurers to educate clients on the limited scope of disability benefits in their policies. Life Insurance Association Singapore president Mark O'Dell said yesterday that the industry had over the last decade launched initiatives, from providing consumer guidelines and literature to enhancing guidance given by financial advisers. Contacted yesterday, lawyer Yeh Jin Sien said his client, Mr Chiang, will be discussing the judgment together with lead counsel Cheong Yuen Hee. The issue of costs awarded in the lower court will also have to be decided. My comments: to the best of my knowledge, and to be fair to ntuc-income, the payout structure for tdp of earlier generation policies were usually not in one lump sum for ALL insurers. even the extended coverage for tpd from age 60 years to age 65 years (age 66 years for oac) were a market driven progression which was implemented at the start of the 21st century. in my involvement with product design/enhancements with various insurers, and in this instance, with ntuc-income on revosave (in the earlier part of 2007), one of the feedback i brought up was to adopt a lump sum payout for tpd instead of the current 10%/10%/10%/10%/60% installment structure. when revosave was launched some 4 months earlier, i was delighted to take note that the management of ntuc-income has incorporated one of the enhancements being the lump sum payout for tpd payout as appended below: Permanent and Total Disability (PTD) Benefit Upon diagnosis of PTD of the life insured before age 65 or maturity (whichever earlier), the full sum assured and accumulated bonuses will be paid to the beneficiaries in one lump sum. Any accumulated coupons will also be payable. The policy terminates thereafter. The maximum total PTD benefit payable (excluding accumulated coupons) on the same life is S$2,000,000, inclusive of all other policies issued by the company. However, any PTD benefit payable will be subject to a maximum of $1,000,000 each time. Any balance will be paid one year later. and the good news that i was given to understand is ntuc-income will also be implementing this new tpd payout structure for all new products to be launched with one scheduled in the second half of january 2008. Source: Everything U Need To Know On Insurance