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If you suffer from a pre-existing condition, it's still possible to take out income protection. Each insurer will have its own rules about which conditions it will and won't cover, so if your application gets knocked back by one, it doesn't necessarily mean you can't get covered by another provider.
How to get income protection if you have a pre-existing medical condition
- Apply for cover and disclose details involving your pre-existing conditions. You can do this either with an adviser or directly with the insurer.
- Accept a greater premium or exclusions on your policy. If an insurer accepts your application for income protection, you can expect to pay higher premiums due to the increased risk that you are exposing them to or your insurer may impose exclusions on your policy (when claims arise from your pre-existing conditions).
- Look for another policy. Try another income protection brand if you don't succeed with your first application.
- Find out what rules your condition is subject to. Make sure you understand what happens when you make a claim relating to your pre-existing condition. We explain this below.
Does income protection cover pre-existing conditions?
Yes, you can get income protection if you have a pre-existing condition. In most cases, you will have to do one of the following:
Some income protection insurance providers will cover you for the pre-existing condition but there will be a loading – this is an increase to the cost of your premiums.
Accept an exclusion
In some cases, if you have a more serious pre-existing condition, such as long COVID, the insurer might cover you but not for any claims related to your pre-existing condition.
Get quotes from insurers that will review pre-existing conditions
What is a pre-existing medical condition?
While the definition of a pre-existing condition can vary, it generally refers to the following:
- A health condition that was diagnosed or investigated by a medical practitioner
- The appearance of certain symptoms leading to a diagnosis
- A condition that occurred prior to the commencement or reinstatement of your insurance policy
Financial adviser Brenton Tong on income protection for pre-existing conditions
Why is it difficult to get income protection with a pre-existing condition?
"There are many things that could knock you out of the workplace for a time, so insurance companies will be very cautious to offer income protection insurance to anyone with a difficult medical background.
If you could imagine the types of things that would stop you from working for 6-12 months – a car accident, a fall on the sports field, chronic fatigue, glandular fever, long COVID, the list goes on. This is especially difficult for those that have a history of mental health issues – even minor."
The bottom line
"The silver lining with income protection and pre-existing medical conditions is that the insurer is more likely to exclude a medical condition rather than flat out refuse to insure you. This means while you're not covered for your particular ailment, you're still covered for all other events and illnesses."
Brenton Tong is the managing director and senior financial adviser at Financial Spectrum.
Common pre-existing medical conditions that can affect your income protection application
Examples of pre-existing medical conditions include the following:
- Cancer. If you are a cancer survivor, your insurance provider will want to obtain specific information of the type of cancer it was, the stage when you were diagnosed, the treatments you took and the results of any follow-up checks.
- Diabetes type I and II. If you suffer from either type I or type II diabetes, you'll be required to undergo a medical examination and can expect to pay a premium loading.
- Epilepsy. You may pay higher premium rates depending on the type of epilepsy you have: idiopathic, symptomatic or focal.
- Heart-related conditions. If you have a heart condition, your insurance provider will want to find more information on whether the condition is treated, the response to treatment or if it is malignant.
- Hepatitis. A declaration of hepatitis on your application will prompt your insurance provider to carry out further investigations. Depending on the type of hepatitis, whether it was a single attack, if you have had a full recovery and it was more than 2 years ago since it occurred, you may be eligible for standard premium rates when you apply for income protection.
- Mental illness. Mental conditions such as depression, anxiety and bipolar disorder are difficult to assess by insurance providers due to a variety of forms, degrees of severity and their unpredictable nature. A medical attendant’s report will always be required in this case.
- Sleep apnea. If you have a history of sleep apnea, your insurer will request more information on your condition and a detailed medical attendant’s report. In some cases, you may be required to complete a medical examination and a high premium loading may be applicable.
Why do you need to declare pre-existing conditions?
To ensure that your income protection policy is tailored specifically to your needs and condition should they provide you with cover, you need to be upfront and honest about any pre-existing conditions you may have. If you withhold information from your insurance provider, it has the right to deny any claim that may arise as a result of your condition and refuse to provide cover.
With so many different income protection policies available in the Australian market, it isn't easy to determine which cover is most suitable for your needs. If you have a pre-existing condition, you should do the following:
- Avoid "automatic acceptance" or "no medical examination" policies unless you are after a policy that won't cover your pre-existing condition.
- Consider speaking to an insurance adviser who can provide tailored recommendations based on your specific needs and requirements. An insurance consultant can minimise the time and effort required in securing an income protection policy, especially if you have a pre-existing medical condition.
- If you don't want to use an adviser, consider a direct insurer who offers a detailed medical questionnaire upfront. Although it takes longer to get cover, there is less uncertainty at claim time.
Is it possible to apply for income protection with no medical?
You will be required to complete a health check-up with most providers when you apply for income protection. This is to enable your insurance provider to obtain a more accurate depiction of your health and the level of risk that it is exposed to should it provide you with cover.
If you are looking to secure an income protection policy with no medical, you may want to consider the following alternatives:
Income protection from direct providers
Direct life insurance providers in Australia, such as Noble Oak and Zurich, offer income protection policies with competitive premiums with minimal medical underwriting. Even though you still have to go through a medical exam and complete a health questionnaire, there are generally fewer restrictions on the eligibility criteria with direct income protection application.
Income protection through super
You can obtain income protection, also known as salary continuance insurance, through your super fund.
You may also already have cover in place through your employer's nominated super fund, so it is best to clarify if this is the case.
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