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How do income protection waiting periods work?

 


income protection waiting periods

Income protection is a type of insurance that pays your income in the event you can’t work due to an injury or illness. You can either purchase your income protection insurance through your Super or directly with an insurance company.

Your income protection policy will have a waiting period.  The waiting period is the time you have to wait, once your claim is accepted, before you receive your monthly benefit.

You won’t receive any income payments during the waiting period.

What will my waiting period be?

If you sign up for income protection insurance directly with an insurer, you’ll likely be asked to choose what your waiting period will be, should you ever have to make a claim.  The shorter the waiting period, the higher your premiums will be.

However, if your income protection insurance is through your superannuation fund like most Australians, you’ll likely have the default waiting period chosen by the fund.

Waiting periods generally range from 30 – 90 days.

How do waiting periods affect making a claim?

As outlined above, when making a claim on your income protection insurance you must satisfy the waiting period before you can make a claim.

However, what if you are sick and modify your work hours due to illness without taking any time off or taking only a small amount of time off work?

This can be a problem as usually you need to be completely off work for some period of time (either the whole waiting period or some less period) before any payments will be made under the policy.

For example, under some income protection policies, you must be totally disabled (ie, completely unable to work due to illness or injury and not working) for at least 14 of the first 19 days of your waiting period to be eligible to claim a total or partial disability income protection benefit. If you’re not totally disabled for 14 days, you will not be entitled to any benefits.

If you get so sick or injured that it’s likely you’ll have to make a claim on your income protection insurance, make sure you seek medical advice as well as check the fine print in your insurance policy to work out what your waiting period is.

Get help?

If you need help with making a claim on your income protection insurance because you’re unsure about whether you’ve satisfied the waiting period, get in touch with today’s blog writer, Tom Cobban, for some free legal advice about your eligibility to claim.

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