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Can I claim on my income protection insurance if I am only partially incapacitated?


Income protection benefits for partial incapacity

Under most income protection policies, you will still be able to claim a benefit even if you are partially disabled from working.

What is considered a partial disability?

How insurance companies define partially disabled can vary, so it is important to check the definitions section in your Product Disclosure Statement to see how it is defined in your policy.

To be eligible to claim a partial disability benefit you must generally be totally disabled for a certain number of days then return to work in a reduced capacity.

If you are eligible to claim a benefit, it will supplement your income to compensate you for your reduced ability to work.

How do insurance companies work out what benefit I will be paid for partial disability?

The formula used by insurers for working out how much your partial disability benefit is varies. Here is an example of a formula used by one insurer (remember, not all policies will be the same):

Consider the example of Dave

  • Dave is an electrician who was on $80,000.00 and working full-time prior to injuring his back.
  • He has income protection insurance which covers him for $5,000.00 per month.
  • As a result of his injury, his doctor told him to cut down his hours to 4 days a week (which equates to $64,000 per annum wages).
  • The partial disability benefit Dave is entitled to claim is calculated below:

Example calculation for income protection for partial incapacityIncome Protection calculation example partial incapacity

Even though Dave is back at work, he is still entitled to claim an extra $12,000.00 per year through his income protection insurance.

Get help?

If you’re back at work in a reduced capacity after an injury or illness and are unsure about whether you’re entitled to claim a partial disability benefit, get in touch with today’s blog writer, Tom Cobban, for some free legal advice.

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