Bill protection insurance

Only a limited number of providers of bill insurance protection will offer cover in the event of death. So, bill protection cover isn't usually considered as a type of life insurance. Also, the benefit may vary between providers. Let's take a closer look at exactly what bill protection insurance is and how it works.

What is bill protection insurance?

Bill protection insurance is a type of insurance that provides a monthly benefit payment to cover your bills should you get seriously injured, ill or become involuntarily unemployed. This protection plan can assist you in meeting your financial obligations so you can focus on your recovery or look for new employment.

What are the key features of bill protection insurance policies?

There are a number of different insurance providers in Australia who offer this insurance plan with various benefits and features.

Some key policy features to look out for include (but are not limited to):

• Choice of monthly benefit: With bill cover, you have the flexibility to choose the monthly benefit amount that you may require to cover your bill payments. The level of cover available is typically between $1,000 and $4,000.
• Guaranteed acceptance: You are not required to undertake any medical examinations or blood tests, which means applying for cover is easy and you will automatically accepted.
• Coverage for illness and injury: In the event of a debilitating illness or injury, bill protection cover will provide you with the monthly benefit amount that you have chosen at the commencement of policy. The benefits can be used to keep on top of your bills while you are recovering.
• Coverage for involuntary unemployment: Bill protection insurance provides coverage for when you have been made redundant, usually for a maximum period of three months. It is important to note that in order to be eligible for this benefit, you will need to be unemployed for a specified amount of time and show that you are actively seeking work.
• Hospital benefit: If you are hospitalised as a result of your illness or injury, a benefit may be payable for each day you are treated.
• Premium waiver benefit: While you are receiving your monthly benefit due to a disability, your premiums may be waived.
• Children's cover: Some providers may offer extra protection to cover your children against specific illness or injury. This feature can usually be added for an additional charge.
• Joint policy: When you include your partner, spouse or other family members in your bill insurance application, you may be eligible for a discount on your premiums.
• Automatic indexation: Your benefit levels will be increased each year accordingly to the Consumer Price Index (CPI) to keep up with inflation.
• Guaranteed renewable: Your policy will be renewed each year up until your 65th birthday, provided that you always pay your premiums on time and regardless of any changes in your occupation, health and lifestyle.
• Tax-deductible premiums: The premiums you pay for bill protection insurance are tax-deductible.

How does bill protection cover redundancy?

Some bill cover plans in Australia offer financial protection for individuals (employee or self-employed) who have been made involuntarily unemployed, for a maximum of three months. The terms and conditions of this feature are often quite strict and may vary between providers.

In order to be eligible for this benefit, you may have to satisfy the following conditions:

• You may be required to have held the policy for a certain period, eg six months.
• You may have to be unemployed for a specific amount of time, eg 14 days, 28 days, etc.
• You may have to be in a continuous employment for a specific period of time prior to claim, eg six months, 12 months, etc.
• Minimum working hours may apply, eg.15 hours, 20 hours, etc.
• You will have to show that you are actively seeking work at the period of unemployment.

If you need more information on the redundancy benefit, it is absolutely essential to read the Product Disclosure Statement (PDS) and remember that they are not offered by all bill insurance providers.

How is bill payment protection different from income protection?

Bill cover plans are quite similar to income protection insurance in terms of the protection they can provide, which is to provide you with monthly financial assistance if you are to become disabled due to an illness or injury. However, there are a few differences between the two types of products that you should know:

Why consider a bill protection insurance plan?

Bill insurance plan is a simple and straightforward form of insurance that is available to a wide range of applicants. To apply for bill cover, you must be:

• Between the age of 18 to 60
• An Australian citizen or permanent resident
• Working for a least 20 hours a week (terms and conditions may vary between policies)
• Have held your current employment for six months or more (eligible period of employment may vary between policies).

If you are looking for an affordable short-term cover for illness or injury, and if you have been made redundant, you may want to consider bill protection insurance.

However, if you require an insurance solution to cover you when you are disabled either long-term or short-term, with additional features and benefit that you can tailor according to your needs, income protection cover may be a better fit for you.