Income Protection Insurance Waiting Periods

What exactly is an income protection waiting period?

An income protection insurance waiting period is the time you must wait from when you become unable to work due to illness or injury to the time you become eligible to start receiving income protection benefit payments. Depending on the policy, waiting periods can range from 14 days up to 720 days.

How long should I make my waiting period?

When deciding on a waiting period, you access whether or not you'd prefer to pay more out-of-pocket in the long term or the short term. For instance:

Waiting periodCost of premiumsWhen an injury/illness occurs
ShorterHigher
  • You won't have to rely as much on your savings and annual leave
LongerLower
  • You'll have to rely more on your savings and annual leave
The start date of the waiting period for temporary disability due to illness claims is usually the day you have been diagnosed with the illness, and the start date of the waiting period for temporary disability due to injury claims is normally the day the accident happened.

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How do the waiting periods for different income protection brands compare?

BrandsMinimum waiting period (days)
AIA14 days
AMP14 days
Asteron14 days
BT14 days
ClearView14 days
Comminsure14 days
MLC14 days
OnePath14 days
TAL Accelerated Protection14 days
Zurich Futurewise14 days
Zurich Wealth Protection14 days
ANZ30 days
NobleOak30 days
Virgin14 days
Zurich Ezicover30 days
InsuranceLine14 days
Real30 days
TAL Lifetime Protection14 days
American Express30 days

Data taken from brand product disclosure statements on May 2017. Benefits, conditions and amounts are subject to change at anytime.

Apply online without an adviser with these direct brands

Rates last updated October 23rd, 2017
Name Product Short Description Maximum Monthly Benefit Maximum % of Income Covered Maximum Benefit Period Waiting Period
Cover up to 75% (to a maximum of $25,000) of your monthly income with NobleOak Income Protection. Benefit period can be tailored to suit your needs.
$25,000
75%
2 years or to the age of 65
30 or 90 days
Protect your lifestyle with Virgin Income Protection. New eligible customers can earn 25,000 Velocity Points. Ends 31 Oct. Min monthly premium and T&Cs apply.
$10,000
85%
5 years
14, 28, 60, or 90 days
Receive up to 75% of you income (up to $10,000 per month) of your income if you're unable to work due to serious illness or injury.
$10,000
75%
5 years
30 or 90 days
Cover up to 75% of your monthly income if you can’t work due to illness or injury, up to a maximum of $10,000 a month. Take out cover today and you could get a bonus $100 Gift Card.
$10,000
75%
5 years
30 or 90 days

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How long can my waiting period be?

Insurers offer a variety of options when it comes to waiting periods. The rule of thumb is the shorter the waiting period you choose the higher your premium will be. This is to offset the risk of an increased rate of claims for policies with shorter waiting periods. You can usually choose a waiting period of:

  • 14 days
  • 30 days
  • 60 days
  • 90 days
  • 180 days
  • 360 days
  • 720 days
Choosing a waiting period should not just be about saving money by selecting a longer waiting period (and thus paying lower premiums). The waiting period you choose should be based on how long you believe you can realistically be without an income before you start receiving a benefit. Example of a waiting period in action

  • Date that income protection claim is lodged and medical practitioner certifies that you are unable to work: 10 June 2015
  • Waiting period applied: 60 days
  • Waiting period expires: 8 August 2015
  • First payment made on 7 September 2015 for first month of benefit period (9 June 2015 to 8 July 2015)

What you need to know about waiting periods

As well as charging more for a shorter wait, some insurers attach additional conditions to their waiting periods. For instance, you may be required to be totally disabled and unable to work for at least 7 or 14 consecutive days of the waiting period in order to qualify for the benefit. You should read your product disclosure statement (PDS) carefully for this reason, and seek professional advice if necessary before purchasing your income protection policy.

How long should my waiting period be?

The length of your waiting period is a very important consideration when purchasing income protection insurance. Everyone’s circumstances are different. In the event that you are suddenly left without an income, you need to ask yourself the question: “Will I have enough money to be financially secure until my benefit payments begin?” Some people have mortgages and car payments, and we all have day-to day living expenses. So, unless we have investments or savings in the bank to draw on, we could find ourselves without money to even put food on the table if our source of income were to dry up suddenly. Therefore, when choosing a waiting period with your income protection policy, you need to factor in your weekly budget, any financial obligations you have and how much sick leave and annual leave you are likely to have accrued through your employment. You can then feel secure in the knowledge that you are in a position to choose a waiting period that you can afford and that will allow you to comfortably bridge the gap between the time of your illness or injury and the day you actually receive your first benefit payment.

Risks of a longer waiting period

  • If you change job roles and are not able to transfer your accrued annual leave, you may find you do not have sufficient leave to fall back on during the longer waiting period
  • You may find that leave and savings are insufficient with the arrival of new financial obligations such as an increased mortgage or the birth of a second or third child

Weekend footy gone wrong

After putting it off for years despite the insistence of his partner, Karen, landscape architect Ken finally took out income protection insurance following the birth of their first son, James. After speaking with his insurance consultant, Ken decided that a waiting period of 30 days should be adequate given the sick leave and annual leave he would be entitled to and the savings he could fall back on. Two years later, while playing football, Ken suffered a major double fracture to his ankle requiring immediate surgery and rendering him unable to work. Ken submitted his claim for income protection and was luckily able to draw on sick leave and annual leave payments during the 30-day waiting period. Ken was under claim for a total of three months while his ankle healed before he was finally able to return to work.

Can I get Income Protection with no waiting period?

Some policies offer features that allow policyholders to skip a waiting period.

Specific injury benefit

Many Income Protection policies offer a specified injury benefit which provides an advance payment separate to the ongoing benefit payment for certain conditions. This advanced benefit will usually begin from the date of the injury, regardless of the choice of waiting period. Injuries that may be covered under the specified injury benefit include:

  • Paralysis
  • Loss of one arm or leg
  • Loss of sight in one eye
  • Fracture of thigh
  • Loss of sight
  • Loss of both feet or both hands

Day 1 accident cover

Day 1 accident cover allows you surpass a waiting period if an injury leaves you disabled for more 3 consecutive days. This allows you to access a portion (usually a daily rate) of your monthly benefit before your waiting period.


Some final questions you might have

A. You can generally pick a waiting period between 14 days and 2 years.
A. This will depend on the policy you choose. Most insurers will let you make adjustments to your policy at later stages, such as adjusting the payment structure or increasing or reducing the level of cover.
A. The shorter the waiting period, the easier it may be for you to successfully make a claim. A less severe injury or illness may only keep you off work for a shorter period of time during which you can successfully lodge a claim.
A. You can pay a reduced premium by selecting a longer waiting period. You should consider if you are able to fall back on other benefits such as sick or annual leave or savings you have accumulated.Accordion 1 content
A. Generally no. Most insurers will allow you to resume receiving payouts (provided you meet the insurer’s eligibility requirements) without having to undergo another waiting period. This will only apply if you resume your claim within a specified period of time, typically six months.
A. Your waiting period should be shown on your policy schedule.
A. As discussed above, all policies require a waiting period to be selected at time of application. The waiting period generally does not apply for the specified injury benefit to be paid.

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Richard Laycock

Richard is the insurance editor at finder.com.au. He is on a mission to make insurance easier to understand.

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2 Responses

  1. Default Gravatar
    JoJuly 23, 2017

    Dear Sir/Madam,
    I have 2 lots of income protection through 2 separate super companies with a 1 month and 3 month wait period respectively, with no exclusions and a 2 year benefit period; and I also have income protection outside super with a 2 year wait period and a mental health exclusion (because I saw a counselor for 1 session) but cover until the age of 65. My question is; is it possible to claim for 2 years on one super policy and when that 2 year benefit finishes can I then claim on the second super pllicy for another 2 years before then claiming (after 4 years) on my policy outside of super? Or should I cancel one of the super policies? I am hoping that I would be covered for mental illness for a benefit period of 4 years if I am able to claim on my 2 super policies consecutively without voiding my policy outside super if I develop some other health issue that prevented me from working until age 65.
    Thank you

    • Staff
      JonathanAugust 3, 2017Staff

      Hello Jo,

      Thank you for your inquiry, you got a very interesting question right there! :)

      Generally, you can. Take note, that there may be some limitations and terms that you need to agree on with your super, so you need to declare the existence of one unto the other. Moreover, some of them may require that your medical documents (to prove your claim) has a certain validity, so you need to confirm this if you’re planning to file a claim for the same medical reasons.

      There are insurers who would require full-recovery in-between your claim on the same policy, so it may be a good idea to check this also.

      If you need professional advice, you may talk to your insurer or talk to an income protection insurance broker.

      Hope this helps.

      Cheers,
      Jonathan

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