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How long you can I keep my cover for?
Most people will take out an income protection policy to protect their income should they find themselves unable to work due to illness or injury. Australians who are between the ages of 18 and 59 who work for 20 hours per week and have been working for the last 12 months can apply for income protection.
The amount you are insured for will be determined by the type of job you have and the features that you agree to when choosing your policy. However, the one thing policies will have in common is that it usually ends when you turn 65 years old.
It will also be subject to how long you pay your premiums. If you happen to miss a payment or two your policy will become void. You will have to speak to your insurer in advance to discuss if your premiums can be waived if you are unable to pay for it.
Know the time frame of your benefit
Knowing how long you can hold onto a policy is one thing. Knowing when your benefit payments will start and end is vital. This will help you prepare yourself financially when it comes to factoring this into your budget.
The monthly benefit payments usually start and end in accordance with the waiting period which you have chosen. The waiting periods are generally between 14 days to 720 days and get paid to you in arrears. You will receive the benefit payments for each month that you are unable to work according to the benefit period you have chosen which can range from; 6 months, 1 year, 2 years or 5 years.
What this means is that if you have chosen a 30-day waiting period and place your first eligible claim, you will only receive your first payment 60 days later.
There are charges that might come with the time frame you choose
You need to be mindful of the time frame that you choose as some of these come with high or lower charges on your premium. There are additional conditions that they might attach to choosing a shorter waiting period that can affect you financially.
For example, if you choose a shorter waiting period some insurers will charge you more for your premiums. Some insurers will require that you are totally disable and unable to work for a period of 7 to 14 consecutive days in order to qualify for the benefit.
You should pay special attention to the product disclosure statement (PDS) that comes with your income protection policy to avoid any delays and confusion when it comes to claiming your benefit. Speaking to a professional broker or insurer who can advise you on the income protection policy you have in mind will give you a sound mind when it comes to finally signing up for a policy.
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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.
The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.
Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of life insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a life insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.
Savvy does not compare all life insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.
For any further information on the variety of insurers compared by Compare Club or how their business works, you can read their Financial Services Guide.
