Looking for income protection without a waiting period? Find out how a day 1 accident benefit can help.
Day 1 accident cover is an option available under some income protection policies that allows you to access benefits before the waiting period on your policy expires. This form of cover gives you protection in case you need money during the initial waiting period.
Note: There are various names for this feature
Different policies will use different terminology. Day-1 accident cover is often referred to as:
- Accidental Injury Option
- Accident Benefit Option
- Day Four Accident
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Which brands offer day-1 accident cover?
Although brands will offer cover from the first day you take out cover, there is usually a minimum you will have show you are disabled before there is any payout.
|Brands||Minimum length of disability before payout||Payout|
|AIA||3 days||1/30th of your monthly benefit per day (until the waiting period is over)|
|AMP||3 days||1/30th of your monthly benefit per day|
|Asteron||72 hours||1/30th of your monthly benefit per day (until the waiting period is over)|
|BT||3 days||1/30th of your monthly benefit per day (until your waiting period is over)|
|ClearView||3 days||1/30th of your monthly benefit per day (until the waiting period is over)|
|Comminsure||3 days||1/30th of your monthly benefit per day (until the waiting period is over)|
|MLC||4 days||Not stated|
|TAL Accelerated Protection||3 days||A proportion of your overall Benefit Amount is paid|
|Zurich Futurewise||4 days||1/30th of your monthly benefit per day (until the waiting period is over)|
|Zurich Wealth Protection||3 days||1/30th of your monthly benefit per day (until the waiting period is over)|
|NobleOak||3 days (Nursing care bed benefit)||A daily proportion of your monthly benefit is offered if you are disabled during the waiting period|
|TAL Lifetime Protection||Not stated||1/30 of monthly benefit is offered per day if claim is made for disability within less than one month of cover being taken out|
Data taken from brand product disclosure statements on May 2017. Benefits, conditions and amounts are subject to change at anytime.
What are the pros and cons of this type of day-1 accident cover?
- Gives you flexibility. This is an ideal option if you believe you will struggle to make ends meet during a lengthy waiting period.
- Quick access to income in a tough time. It is useful if you can’t work and need quick access to cash due to a drain on your savings.
- Beneficial in the following circumstances:
- You don’t have enough disposable income for daily necessities and ongoing bills.
- If you’re self-employed or aren’t entitled to sick leave benefits
- Comes at an additional cost. Day-1 accident cover usually requires you to agree to a higher premium.
- Overlap with other benefits. Options such as a specified injury benefits may also pay out in the same situation where day-1 accident cover pays out. Unfortunately you’ll only receive one payout both benefits despite paying an additional premium for both.
What benefits can overlap day-1 accident cover?
Beware, some of these benefits may provide the same type of cover as day-1 accident cover
- Scheduled injury benefit
- Paralysis benefit
- Crisis benefits
- Bed confinement benefits
- Loss of limb benefits
What are the requirements for day 1 accident cover?
- Proof of impairment. You must prove that your disability is due to an accident
- Threshold. You'll need have been disabled for a minimum amount of time e.g. 3 days.
- Specific waiting periods. You are typically eligible if you have a waiting period of 14 to 90 days.
What's considered an accident?
An accident is usually defined as an injury to the body caused by an external source outside your control e.g. being hit by a car.
What's considered disablement?
Under income protection, total disablement is defined by the following:
- You can no longer perform one or more duties outlined in your normal occupation.
- You are under the care and guidance of your general practitioner.
How much income protection will I receive?
If you select day 1 accident cover, you’re typically eligible to receive a portion of your monthly benefit, each day. This is usually around 1/30th of the benefit.
Day 1 accident cover on a $5,000 benefit
If your policy has a monthly income protection benefit of $5000 as well as a 45-day waiting period, you will be eligible for over $166 a day (for 45 days).
When will a payment start and end?
Payments begin as soon as you show you have been disabled for three days or continue to suffer from a disability due to an accident. You must prove the following:
- When the incident or accident took place
- When you received medical attention and aid
Payment usually ends
- When the waiting period is over
- When you recover