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Coronavirus: Will income protection cover me?

Learn how income protection can help – whether you’ve already got coverage or you’re thinking about buying it.

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The coronavirus (COVID-19) pandemic is putting thousands of jobs at risk. If you're worried about being out of work for a while, either because you could fall sick or your business might be forced to close, income protection insurance could help.

Disclaimer: If you collect income protection insurance benefits, you won't be able to claim any welfare payments from the government.

How does income protection work?

Income protection insurance promises to pay a percentage of your typical wage if you ever become too sick or injured to work. For a monthly fee – usually around 1-2% of your salary – it gives you peace of mind that you'll be able to pay the bills, even if your income suddenly stops.

It's typically available to both employed and self-employed people, and some income protection policies will even let you add involuntary unemployment cover to your policy. That way, you're not just covered in the event of illness or injury, you're also covered if you're made redundant.

Will income protection help if you catch coronavirus?

If you have income protection insurance, you should be able to claim on your policy if you catch COVID-19 and are out of work for a while. Even if you buy a policy today, it's likely you'll still be covered for COVID-19 if you catch the disease in a few weeks.

A representative for NobleOak confirmed that customers would be covered for COVID-19 under their income protection policy.

"Fortunately for our clients, there is no pandemic exclusion clause in the NobleOak insurance covers and we have no intention of introducing a coronavirus (COVID-19) exclusion," he told Finder. "This means COVID-19 is covered."

However, most income protection policies have a waiting period for illness. This means you have to wait a set length of time between when you stop working and when you can make a claim. You won't receive any money during the waiting period, and it won't be backdated.

Sometimes, you can customise your waiting period – the longer you make it, the lower your premiums will be. The table below shows the minimum waiting periods with Australian brands.

BrandMinimum waiting period for sickness
AAMI30 days
AIA14 days
AMP30 days
ANZ30 days
Aspect14 days
Asteron14 days
BT14 days
Clearview14 days
Comminsure30 days
Guardian30 days
HBF30 days
Insuranceline14 days
Medibank30 days
MLC14 days
nib14 days
NobleOak30 days
OnePath14 days
Qantas14 days
Real30 days
TAL14 days
Virgin Money14 days
Zurich30 days

As such, the NobleOak representative said it's unlikely there will be a sharp increase in the number of claims due to the coronavirus, largely because waiting periods will exclude many people.

"We do know the recovery rate from this virus is good and generally within 14 days for people under 65 years of age and who do not have a compromised immune system," he said. "So we're not expecting a large influx of income protection claims to arise directly due to the virus."

What if you're made redundant because of COVID-19?

If you have income protection insurance with redundancy cover, you may be able to claim in the event you lose your job or your business has to close because of the coronavirus.

However, redundancy cover has some key restrictions. First, you must serve a no-claim period. This is the length of time from when you buy your policy to when you become eligible for benefits. Typically, this is six months.

During this no-claim period, your employer cannot give any indication that redundancies or closures may occur, otherwise the redundancy cover is void.

There is also a waiting period. This is the length of time from when you lose your job to when you can claim benefits. Typically, the waiting period is 28 days.

That means if you bought your policy today, you would have to be safely employed for at least six months, with no indication that your employer is planning to make redundancies before your policy has value. If you were made redundant after those 6 months, you would have to be out of work for 28 days before you could lodge a claim for redundancy benefits.

Is it too late to get income protection insurance?

No. It's never too late to get income protection insurance. Even if you don't end up needing it due to the coronavirus (COVID-19) pandemic, it may come in useful at a later date.

NobleOak hasn't changed its underwriting criteria for income protection insurance despite seeing a surge in the number of inquiries.

"NobleOak has experienced an increase in queries since news of the coronavirus first emerged," said the representative. "However, even with the reasonably negative media reporting, this has not changed the way in which we have always underwritten new client applications."

So if you've been thinking about getting income protection, there's no harm in doing it now.

However, the NobleOak representative did say that if anyone is interested in income protection insurance, they should be completely open and honest with their insurer during the underwriting process.

"Clients should ensure that they disclose any international travel and immediate future travel plans (within the next 12 months), so the potential exposure to coronavirus can be assessed," he told Finder. "We would also remind our clients of their duty of disclosure to inform us of any changes to their health and/or occupation situation prior to their cover commencing."

What are my other options for financial help during COVID-19?

Regardless of whether income protection insurance is right for you, there are several other ways you can seek financial support if you've been adversely impacted by the coronavirus pandemic.

If you're worried about the prospect of unemployment, read our guide on how to prepare, so you'll be in a stronger financial position if you do find yourself out of work.

If you've already lost your job, you may be able to claim financial hardship and take a break from bills. Our guide walks you through the ways you can get help.

Speak to an advisor for help with income protection and COVID-19

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Compare direct brands for income protection in Australia

Name Product Maximum Monthly Benefit Maximum % of Income Covered Maximum Benefit Period Waiting Period Options
NobleOak Income Protection
$25,000
75%
2 years or to the age of 65
30 or 90 days
Get 2 months free when joining combined cover. Offer ends in April 30, 2020. T&Cs apply.
Medibank Standard Income Protection
$7,500
75%
5 years
30 or 90 days
10% discount for Medibank health members & go into the draw for $1,000 Gift Card when you get a life insurance quote.
ANZ Income Protection
$10,000
75%
5 years
30 or 90 days
Earn 1 Qantas Point for every $1 of premiums paid.
Virgin Tailored Income Protection
$10,000
85%
5 years
14, 28, 60, or 90 days
AAMI Income Protection
$10,000
75%
5 years
14, 28, 60 or 90 days
nib Income Protection
$10,000
85%
2 years
14 or 28 days
Get one month free when paying annually. T&Cs apply.
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