Income Protection Insurance Features

An Income Protection Insurance policy can replace part of your lost income if you are unable to work because of illness or injury. Each Insurer will specify conditions that need to be met before their policy responds and begins to pay benefits. These conditions are noted in a document called a Product Disclosure Statement (PDS) and will specify how long claims will be paid, how sick or injured the policyholder will need to be for a claim to be paid and many other features and rules.

The features and rules for each income protection policy differs widely across the policies offered by insurers. Some policies offer generous features and are more likely to pay benefits. The generosity may differ based on how you buy the policy, how much you pay and how much evidence of good health you give the insurer when you apply for the cover. Generally, cover obtained via insurance brokers have more extensive features that cover obtained by purchasing cover directly with an insurer or with cover automatically issued via public superannuation funds. But there are exceptions.

You should read the PDS carefully before buying cover and/or have the features explained to you by a financial adviser and you should consider getting personal financial advice beforehand.

A particular Income Protection Insurance feature that is an important consideration for Doctors, Dentist, Vets and other professionals is the Partial Disability benefit (if any). This is relevant if you are sick or injured and able to only work part of the time, relative to before your illness or injury. Most income protection policies will pay a benefit if you are unable to work at all (often referred to as Totally Disabled), but the ease of claiming when Partially Disabled can vary widely. Some policies may not even offer any benefit in the event of a partial disability.

The Waiting Period is the length of time you must be disabled before an Income Protection benefit is first payable. The longer the waiting period, the less likely a claim will be paid, and the cheaper the policy will be.  The rules regarding how sick or injured you must be in this Waiting Period differs and can materially impact your chances of receiving a claim. For example, some policies may require you to not work at all for a minimum period of time during the Waiting Period before a benefit becomes payable. Other policies may be more generous and only require the insured to be Partially Disabled during the Waiting Period to be eligible to receive a benefit. Industry jargon refers to the latter as a “Partial From Day 1” benefit and is regarded as a valuable feature.

This is general information and limited in its scope.  If you are considering buying or replacing and Income Protection insurance policy then contact us to arrange a review for you. We can consider your individual circumstances, goals and needs and recommend a suitable insurer, product and structure to use. Experien work with several insurers and have extensive experience in helping to arrange Income Protection claims.  We will explain features such as Partial Disability to you and help you to select a suitable product for your needs and budget.

At the time of writing, Life insurance and Financial Advice services are provided by Experien Insurance Services Pty Ltd (EIS) ABN 99 128 678 937 and Experien Financial Services Pty Ltd (EFS) ABN 32 631 346 757. EIS and EFS are a Corporate Authorised Representative (No. 320626 and No. 1274354) Count Financial Limited ABN 19 001 974 625, AFSL 227232. See our website for our Financial Services Guide and latest AFSL arrangements. Always read the Product Disclosure Statement issued by an Insurer before considering insurance.

14 May  2024