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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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In the midst of the coronavirus (COVID-19) pandemic, thousands of Aussies were temporarily stood down or made redundant. While Australia is slowly reopening, many people still harbour fears that a recession is the next big hurdle.

If you're worried about losing your job due to the lasting effects of coronavirus, whether that's thanks to a new wave of cases or an economic downturn, income protection may be able to help.

How will income protection help if I lose my job?

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

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's 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.

It's also important to know that claiming income protection benefits in the event of redundancy will impact your ability to claim welfare payments from Centrelink.

Compare income protection in Australia

Name Product Maximum Monthly Benefit Maximum % of Income Covered Maximum Benefit Period Multiple Waiting Periods
AAMI Income Protection
5 years
Insuranceline Rate Saver Income Protection
5 years
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Does income protection insurance cover coronavirus?

Yes. There are no exclusions for epidemics or pandemics in income protection policies. That means, as long as you meet the other conditions laid out in your policy, you'll be able to claim on your income protection insurance if COVID-19 stopped you from earning a living.

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. However, be aware that some income protection insurers have stopped offering the redundancy add-on option, so you might not be covered if you lose your job.

A representative for NobleOak, a major provider of income protection insurance in Australia, confirmed that customers would be covered for COVID-19 under its 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."

How will income protection help if I get sick?

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.

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
AAMI14 days
AIA14 days
AMP14 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
Zurich14 days

As the recovery rate from COVID-19 is generally within 14 days for people under the age of 65 who don't have a compromised immune system, few people will be sick longer than the waiting period laid out in their policy. Those people will not be able to claim on their policy.

What else should I know about income protection and coronavirus?

Many insurance companies have stopped offering redundancy cover for new income protection policies, so you might not be able to find cover which will pay out if you lose your job.

However, income protection will still cover you if you're unable to work due to illness or injury - whether it's related to the coronavirus or not.

Remember, it isn't too late to get income protection insurance. Even if you don't end up needing it due to the coronavirus pandemic, it may come in useful at a later date.

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