What is income protection insurance?
Income protection insurance provides you with an income stream when you can no longer work due to illness or injury.
- Income protection is a regular payment (usually monthly), paid while you can’t work
- Income protection is sometimes also called salary continuance (SC), total disability (TD), or total and temporary disability (TTD)
- There is a waiting period, usually between two weeks and three months
- It is paid for a set period of time, usually 2 years, 5 years, or to age 65
- The payment is usually around 75% of your income
- Income protection is usually reduced by other income, including workers compensation and Centrelink payments
- Some income protection insurance policies pay top up if you can only return to work part-time, or in a lower paid job
Many Australian workers now have income protection insurance. Some people buy it directly from an insurer, or through their bank, while others get it through their super. Many people do not even know they are covered.
How does it work?
Generally, income protection insurance covers you for about 75% of your pre-injury salary. The frequency of payments, age limit restrictions and the length of time you are entitled to claim for benefits vary between policies. In addition, payments may cease if your employment is terminated or if you have been paid a TPD claim benefit.
Policy terms also tend to vary relating to how severe your condition needs to be for you to qualify for benefits. Some policies will pay you an income protection benefit only where you are unable to perform your usual job, while others pay where you cannot perform any occupation for which you are suited based on your education, training or experience.
Some policies may have an offset clause. This means that the benefit payout you receive from the insurer may be reduced if you have received other income while you have been unable to work, such as WorkCover payments or Centrelink benefits.
How do I make a claim?
We're experts in this area of law and we suggest you obtain independent legal advice so you are aware of all your potential disability benefits, and to maximise your claim to entitlements. You should act quickly when lodging a claim, as time limits may apply.
- The first thing is to find out how much income protection cover you have. We can find out for you, on an obligation-free basis.
- We can then run the claim for you, including dealing with insurer, doctors, tax office, Centrelink, and your workers compensation insurer.
- We act No Win - No Fee* in income protection claims.
What if the insurer doesn’t pay?
We often see clients who tell us that their insurer has refused to pay their income protection claim. Sometimes the insurer finds a doctor who says the person can work. In other cases, the insurer tries the cancel policy, saying that there was non-disclosure, or insurance fraud. Sometimes the insurer says the condition is a pre-existing condition.
Our experience is that very often we can overcome these problems and get our clients paid, either by lodging a dispute with the insurer directly, or by taking the case to Court.
What types of income protection insurance policies are available?
The two types of income protection insurance policies are:
- Agreed value insurance - your benefit payment is predetermined and reflects your income when your policy commenced.
- Indemnity value policies - your benefit payments may vary depending on your income at the time of making a claim.