Income protection that offers lump sum payout? Consider a policy with a specified injury option.
When you take out an income protection insurance policy, whether it’s a standalone policy or combined with life insurance, you may have a range of extras to choose from. The specified injury benefit is an extra that adds more circumstances in which your policy will pay out.
How is it different to normal income protection benefits?
A specific injury benefit is similar to trauma insurance in that it will pay out if you experience a specific health event during the policy period. The main difference is that:
- You are paid for specific injury. Not on the basis of you being unable to work
- You choose how the policy will payout. Option of regular monthly benefits or a single lump sum benefit
- It may cost extra. Specified injury cover is an additional option on top of income protection
Which income protection brands also offer lump sum benefits for disabilities?
|Brands||Maximum payment||Type of lump sum|
|AIA||Lesser of $3,000,000 and 180 times your monthly insured benefit||Total disability benefit|
|AMP||$250,000||Accidental death benefit|
|Asteron||$60,000||Accidental death benefit|
|BT||1/30th of the insured persons monthly benefit each day they are disabled during the waiting period||Total disability benefit|
|Comminsure|| A payment to the lesser of||Accidental death benefit|
|MLC||$60,000.00||Accidental death benefit|
|OnePath||$30,000||Accidental death benefit|
|TAL Accelerated Protection||Up to 6 times the benefit amount up to a maximum of $50,000||Accidental death benefit|
|Zurich Futurewise||Up to 4 months of benefit payments (Up to $75,000). Up to $150,000 can be added as an option.||Accidental death benefit|
|Zurich Wealth Protection||The lump sum payable will be the percentage set out in the policy schedule.||Accidental death benefit|
Data taken from brand product disclosure statements on May 2017. Benefits, conditions and amounts are subject to change at anytime.
Some of the conditions that you'll need to consider include:
- Entry age
- Minimum and maximum payments
- Benefit might only be available on certain types of plans
- Amount paid might depend on the injury type
What does the specific injury option do?
An income protection insurance policy with a specified injury inclusion will pay you either:
- A set lump sum benefit or;
- A regular monthly for a set duration (How long it keeps paying out depends on your injury)
Specific Injury Benefit vs Regular Income Protection
|Income protection benefit||Specific injury benefit|
|When can a claim be made?||You are unable to work due to injury or illness||A specific injury occurs that's covered in your policy|
|Is there waiting period before I receive payments?||Yes||Not usually|
|How am I paid out?||Monthly benefit||Lump sum or monthly benefit|
Who should consider this cover?
This option may be particularly useful for people who are less likely to be able to claim an income protection payout. You might want to look into this cover for the following situations:
- If you’ve selected an “own occupation” income protection policy instead of an “any occupation” one. The specific injury option might be a more cost effective way of expanding your cover than getting an any-occupation policy.
- If your job is not physically intensive, and you will be able to continue performing it even if you become seriously disabled. White collar workers, for example, may not meet the “unable to work” requirement even with a fairly serious injury. This option can help you get benefits even if you are still physically able to work.
- If you are an eligible homemaker or you work from home and do not have a policy with a home duties payout condition.
- If the nature of your work or pastimes means you might be more likely to experience one of these injuries, similar to how medical professionals might specifically look for needlestick cover. For example, if you play rugby, you might be relatively likely to get a fractured collarbone at some point and may be more likely to benefit from this option.
- You want to expand your cover, or if you’re worried that you won’t meet income protection payout conditions because you’re still able to work even if you suffer serious health events.
What types of injuries are covered?
If you choose this option with income protection, you can claim ongoing benefits if you experience one of the injuries or illnesses specified in the policy, regardless of whether you’re still able to work. Your payment period depends on the type of injury. For example, a typical policy has the following benefit periods:
|Specified Injury||Benefit period (if you choose a monthly benefit)|
|Total and Permanent Loss of:|
|Both hands and feet||24 months|
|Sight in both eyes||24 months|
|One hand and one foot||24 months|
|One hand and sight in one eye||24 months|
|One foot and sight in one eye||24 months|
|One arm or leg||18 months|
|One hand or foot, or sight in one eye||12 months|
|Thumb and index finger on the same hand||6 months|
|Femur or pelvis||3 months|
|Skull, except the face bones||2 months|
|Jaw, upper arm, elbow or shoulder blade||2 months|
|Lower leg, ankle or kneecap||2 months|
|Foot, heel, hand or lower arm||1.5 months|
|Wrist or hand, excluding fingers||1.5 months|
|Collar bone||1 month|
- The more serious the injury, the longer the benefit period.
- Your monthly payout will generally be a fixed portion, such as 75%, of your typical monthly income at the time of the accident.
- Some policies may give you the option of claiming the full benefits as a lump sum instead of in monthly payments.
For example, you might opt for a critical illness trauma policy without injury cover and use the specified injury income protection option to cover yourself in the event of physical injuries.
Conditions that apply
Although it resembles the benefits offered by trauma insurance and other types of cover, the specific injury option is part of income protection insurance. This means it’s subject to the following terms and conditions of this policy type:
- Waiting periods. With income protection, you cannot claim benefits until you’ve been unable to work for a period of time equal to the waiting period in your policy. Even with the specific injury benefit, you will typically need to be unable to work for a certain length of time as a result of injury. However, you may still be able to claim benefits even after returning to work.
- Limits. There are often set dollar limits on income protection insurance policies as well as time limits for benefit periods. For example, you might be able to claim benefits for paralysis for up to 60 months or $150,000, whichever comes sooner.
- Multiple claims. You may need to choose between claiming under your specified injury benefit, your standard income protection benefits or a different type of insurance altogether. The main advantage of this feature is that it expands the circumstances where you can make a claim. It will not necessarily let you claim more than you could otherwise.
- Exclusions. Your policy exclusions may also apply to this type of cover. For example, pregnancy-related health issues are often not covered by income protection insurance, although some policies will let you freeze premium payments instead.
Policies with specified injury benefits
You can learn more about your income protection insurance options or get quotes to start comparing cover.