If you are sick or injured and unable to work for a while – or even ever again – you can breathe easy knowing your income protection policy will cover up to 85% of your income every month for a set period while you're recovering.
Depending on what your injury or illness is, some insurers offer your payout as an upfront lump sum rather than on a monthly basis until the policy expires. This can be particularly handy if you've accumulated significant medical expenses during your initial treatment.
A lump sum payout isn't available for all types of illness or injury. For example, you can't take a few months off work for a broken leg and expect to get a lump sum paid out. Generally speaking, a lump sum benefit is available if you become totally and permanently disabled. Each insurer has its own criteria that must be met to be considered for a lump sum payout under total and permanent disability (TPD).
Conditions that are commonly covered by a lump sum benefit include cancer, stroke or quadriplegia, among others. Be sure to have a look in the insurer's product disclosure statement (PDS) for an exact list of qualifying events and medical definitions, as often you'll be eligible for a lump sum payout if your condition fits those pre-determined in the PDS.
To be eligible for a lump sum payout, you'll usually need to be medically certified that you are totally and permanently disabled. This means your doctor has decided you're unable to return to the workforce due to your condition.
Once your doctor has given you TPD certification, the lump sum settlement is usually determined as follows:
| Response | WA | VIC | SA | QLD | NSW |
|---|---|---|---|---|---|
| None of the above | 4.5% | 3.08% | 3.7% | 2.73% | 3.06% |
| Getting married | 3.6% | 1.03% | 0.91% | 0.56% | |
| Having a baby | 3.6% | 2.4% | 1.23% | 1.82% | 2.51% |
| Starting a new job | 2.7% | 1.71% | 2.47% | 3.64% | 1.95% |
| Buying a car | 0.9% | 0.34% | 0.28% | ||
| Buying a home | 0.9% | 2.74% | 3.7% | 1.82% | 2.79% |
| Retirement | 0.9% | 0.68% | 1.36% | 1.39% | |
| Starting university education | 0.9% | ||||
| Getting older (but not retiring) | 1.71% | 1.23% | 0.91% | 1.95% | |
| Starting my own business | 1.37% | 1.36% | 0.56% | ||
| Moving home | 0.68% | 0.45% | 1.11% | ||
| Your children moving out of home | 0.45% |
If you don't choose a lump sum payout, you can receive your benefit on a monthly basis for a specified period. If you've met the criteria for a lump sum payout, generally you'll be eligible to receive the monthly benefit up until age 65 (depending on your insurer and policy).
Here is a list of insurers that offer the option of a lump sum payout:
| Brand | Offers lump sum payout? | Apply |
|---|---|---|
 | Get quote | |
 | Get quote | |
 | Optional | Get quote |
 | More info | |
 | More info | |
 | More info |
It's wise to always read the PDS before deciding on the right policy for you as each product varies slightly.
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