Partial Disability

Partial disability provisions within Australian income protection insurance recognize that disability often isn't absolute, creating middle ground between full disability and complete recovery. Unlike TPD (total and permanent disability) requiring complete work incapacity, partial disability acknowledges valuable interim states where insured persons can work in reduced capacity. Standard definitions require: inability to perform one or more important duties of regular occupation, working reduced hours due to illness or injury, suffering income loss of typically 20% or more compared to pre-disability earnings, and being under medical care with ongoing treatment. Benefits calculate proportionally: if pre-disability income was $8,000 monthly and current reduced-hours income is $5,000, the 37.5% income loss results in 37.5% of monthly benefit payment. Most policies cap partial disability benefits at 75-80% of pre-disability income when combined with work earnings, preventing over-insurance. Partial disability serves crucial rehabilitation purposes, facilitating gradual return to work without immediate benefit cessation. The 'own occupation' vs 'any occupation' distinction applies here too, affecting whether reduced capacity in your occupation qualifies if you could work full-time in different work. Waiting periods apply before partial disability payments commence, typically aligned with the policy's main waiting period (30, 60, or 90 days). Maximum benefit periods vary widely: some policies limit partial disability to 12-24 months, others match the main benefit period (to age 65 or 70), some use graduated formulas reducing over time. Evidence requirements include: medical certificates confirming ongoing restrictions and reduced capacity, employment confirmation showing actual hours and duties performed, income evidence (payslips, tax returns) demonstrating earnings loss, and functional capacity assessments detailing specific limitations. Progressive claims are common: starting with total disability claim, transitioning to partial disability as recovery enables some work, potentially returning to full duties or settling into permanent reduced capacity. This flexible approach supports positive rehabilitation outcomes rather than all-or-nothing disability paradigms. Partial disability claims face particular scrutiny around: whether work capacity is truly medically restricted vs voluntary underemployment, accuracy of income loss calculations, whether reduced work relates to disability or other factors (business downturn, voluntary lifestyle change), and sustainability of partial work long-term. Recent regulatory focus emphasizes supportive claims practices facilitating return to work attempts without penalizing claimants for trying to resume employment.