Once you take out income protection, the length of time that your income protection is paid for is known as your benefit period. During the benefit period, your insurer will pay your agreed monthly earnings up to a percentage.
Insurers typically offer the following benefit period options:
Long-term benefits are usually accompanied by a higher premium (the cost you pay for the insurance), as opposed to a lower premium for short-term benefits where the payout period is shorter.
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It’s vital you consider all the factors relative to selecting the optimal benefit period for your future circumstances. Here’s a list of what you should weigh up before deciding on a benefit period for your income protection insurance:
If you’re looking at your insurance as a way to safeguard you against major accidents and illnesses that could see you permanently disabled or unable to work, a policy with a longer benefit period and a higher premium will be more beneficial to you.
If you are concerned about injuries or illnesses that could see you off work for a short to medium period of time, but not indefinitely, a policy with a lower premium and shorter benefit period could be for you.
Your income protection benefit will end under the following circumstances:
It’s important to remember that your contract can be cancelled at anytime if your insurer finds you have acted outside the contractual parameters outlined in your policy. You must disclose all relevant medical information to your fund to avoid termination of your income protection insurance policy.
No. The waiting period is the amount of time before your benefits kick in (as opposed to the length of the benefit). Longer waiting periods are generally less expensive than shorter waiting periods, as shorter waiting periods allow for you to receive monthly benefits sooner.
Your benefit period begins as soon as your GP or medical practitioner determines that you are unable to work due to injury or sickness. From here, your claim for benefits under income protection insurance will be approved, given you have fulfilled your waiting period requirements. If you can’t work once the benefit period is over, you may be eligible for total or partial disablement benefit option.
It’s important to note, benefits generally don’t begin on the first day of your injury or illness, due to the time it takes to see your doctor and notify your fund.
Insurers typically offer the following waiting period options under salary continuance:
Certain insurance policies will offer lump-sum payouts for specific injuries and illnesses. When you are comparing policies, review the product disclosure statement (PDS) for specific circumstances or injuries that offer additional payouts.
A specific injury benefit is designed to help those needing immediate assistance following an injury or illness that sees them unable to work. It differs to a normal monthly income protection benefit, as it’s paid whether you’re still working or not. You’re typically paid in advance as a lump sum benefit (that isn’t part of the standard income protection benefit).
This is dependent on the nature of your injury.
| What does this include? | How long can I receive the benefit for? | |
|---|---|---|
| Common injuries | Fractures, sprains, etc | 1-3 months |
| Serious injuries | Loss of a limbs or body parts, etc | 1-2 years |
| Paralysis | Spinal cord injuries, paraplegia | Up to 5 years |
Here is a list of injuries that are generally covered under your lump-sum specific injury benefit:
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Income protection can be a valuable form of cover for Australians when its features are fully understood.
Find out what is and isn't covered by AAMI Income Protection and how to apply.
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Find out how much your income protection insurance policy will pay out in the event of a claim. Receive quotes for income protection and apply securely.
