Income protection waiting period
Income protection waiting periods range from 14 days to 2 years and could mean you wait longer to receive your benefits.
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An income protection waiting period is the time you need to serve before you are eligible for monthly benefit payments. When you sign up to an income protection policy, you generally get to choose how long a waiting period you want.
Compare the income protection waiting period on different policies
What is an income protection waiting period?
With income protection insurance, the waiting period is the amount of time that must pass before you are eligible to receive income protection benefit payments. Most insurance policies have a waiting period because it prevents people from simply taking out a policy when they become sick, injured or ill.
You'll often be given a choice of waiting period when signing up, typically ranging from 14 to 90 days. Shorter waiting periods tend to cost a little more but you can claim faster, whereas a longer waiting period may reduce your costs but won't help you out in any sudden claims.
How do waiting periods work?
The waiting period begins from the date that you make a claim. So for example, if you take out a policy with a 30-day waiting period and make a claim on 1 June, the waiting period will end on 1 July.
Income protection insurance policies are generally paid in arrears in monthly installments. This means that once you have cleared your waiting period, you will have to wait another 30 days to accrue a month's worth of benefit which is then paid to you.
It's important to remember this when selecting a waiting period as you will not begin receiving your payments on the day your waiting period finishes. Instead you will begin accruing you benefit on that day.
The example in the table below breaks down how a waiting period works:
|Claim event||Dates||Number of days since claim|
|Date you make a claim (30 day waiting period begins)||1 June.||0 days|
|Waiting period end date (Start accruing monthly benefit)||1 July||30 days|
|First payment received after 30 more days||1 August||60 days|
In this scenario you begin accruing your benefit on 1 July and will be paid after 30 days for the period 1 July to 1 August. So the total amount of time before you receive any payments aftr making your claim is 60 days.
What waiting periods are offered by Australian insurance brands?
Most income protection insurance waiting periods are between 14 and 90 days. Many will give you a number of options, for example 14, 28, 60 or 90 days. In most cases, you won't get income protection insurance with no waiting period. Check out the table below to see what choices you have.
|Brand||Waiting periods offered|
|AIA||14 days, 30 days, 60 days, 90 days, 1 Year, 2 Years|
|Asteron||14 days, 30 days, 60 days, 90 days, 1 Year, 2 Years|
|BT||14 days, 30 days, 90 days, 180 day, 360 days, 720 days|
|ClearView||14 days, 30 days, 60 days, 90 days, 180 day, 1 year, 2 Years|
|Comminsure||30 days, 90 days,|
|MLC||14 days, 30 days, 90 days, 1 Year, 2 Years|
|OnePath||30 days, 90 days,|
|TAL Accelerated Protection||2 weeks, 4 weeks, 8 weeks, 13 weeks, 26 weeks, 52 weeks, 104 week|
|Zurich Futurewise||30 days, 60 days, 90 days, 180 day, 1 year, 2 Years|
|Zurich Wealth Protection||14 days, 30 days, 60 days, 90 days, 180 day, 1 year, 2 Years|
|ANZ||30 days, 90 days,|
|NobleOak||30 days, 90 days,|
|Virgin||14 days, 28 days, 60 days, 90 days|
|Zurich Ezicover||30 days, 60 days, 90 days|
|InsuranceLine||14 days, 28 days, 60 days, 90 days|
|Real||30 days, 90 days,|
|TAL Lifetime Protection||2 weeks, 4 weeks, 13 weeks, 2 years|
What's the right income protection waiting period for me?
Not sure what income protection waiting period is right for you? Check out the pros and cons below.
Shorter waiting periods
- You get paid faster
- Peace of mind, knowing you won't need to worry about paying bills
- It tends to be more expensive
- You might not need it that quickly, for example, you may have accrued enough sick days to get by
Longer waiting periods
- Premiums tend to be cheaper than shorter waiting periods
- If you have enough savings, you might not need the payments immediately
- In some cases, it can be a long time to go without an income
- You might need it earlier to pay bills, rehabilitation costs and more
Can you get income protection insurance with no waiting period?
In most cases, no. All policies have a waiting period that you will need to serve, unless you have Day 1 accident cover or a specific injury benefit (more on this in the below section). However, with some insurers, you probably won't need to serve a new waiting period if you return to work and your sickness or injury recurs within a few months of your last benefit payment.
The amount of time you will be eligible for this depends on the insurer so it's always best to consult the product disclosure statement or call them. Generally speaking though, you will find that you are still eligible if it occurs within six months of your last benefit payment.
However, this won't apply if your sickness or injury is due to an unrelated cause. In these circumstances, you will have to serve a new waiting period.
Do any income protection policies offer no waiting periods?
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:
- 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 to surpass a waiting period if an injury leaves you disabled for more than three consecutive days. This allows you to access a portion (usually a daily rate) of your monthly benefit before your waiting period.
An income protection waiting period scenario
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 on 1 April and was luckily able to draw on sick leave and annual leave payments during the 30-day waiting period. Ken received his first monthly payment on 31 May and was under claim for a total of 3 months while his ankle healed and he was able to return to work.
Can I change my waiting period later on?
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.
If you are able to change your waiting period, it will affect your premiums. For example, if you reduce your waiting period from 30 to 14 days, your premiums will increase. However, if you increase your waiting period, your premiums will most likely come down. Make sure that you won't be charged by your insurer for simply changing your policy waiting period.
Can I have multiple income protection policies with different waiting periods?
Yes. In fact, this is one of the main reasons many people have multiple income protection insurance policies. Although income protection benefits are capped at 75% of your income (meaning that if you have two income protection policies and claim on both, your total payout will always be 75% of what you earn) having two can be a good idea. For example, if you have a policy with a waiting period of 30 days and another with a 2-year waiting period, you will be able to receive payments for benefits covering you for both short- and long-term financial loss as a result of injury or illness.
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