fbpx

What is a benefit period and which one is best for you?

Published on November 25th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors



Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.

At Savvy, our mission is to empower you to make informed financial choices. While we maintain stringent editorial standards, this article may include mentions of products offered by our partners. Here’s how we generate income.

The length of a benefit period

When you take out an income protection policy you have the choice of choosing between a 2 to 5 year benefit period. The length that you choose will affect your premiums. A longer benefit period usually comes with higher premiums. A shorter period means that you will have lower premiums, but the pay-out will be for a short time. Therefore, you need to carefully consider your period. Speaking to a financial advisor or your insurer will help you know which will be more suitable for your lifestyle or the type of occupation you have.

Considerations when choosing a benefit period

To get the most out of your benefit period it is important that you consider various factors such as being able to manage your everyday living expenses and how you will be able to pay off your bills and debt. Always keep in mind that your income protection policy is something that will take the place of your salary when you are no longer able to receive one due to falling ill or sustaining an injury. Therefore, all the expenses that you had to pay when you were still receiving a salary need to be taken into consideration.

Be aware of the waiting period

Being aware of the fact that there is a waiting period before you will be able to access your income protection will help you better prepare your finances. The typical waiting period varies from 14, 30, 60, and 90 days. Your insurer will only be able to approve your claim once they have been given the go-ahead by your medical practitioner who will be able to vouch that you are unable to work due to an injury or illness you have.

What can cause your benefit period to end?

When taking out a policy the three main important things you need to know is; how much will it cover you for, what features does it come with, and what will cause it to end. When it comes to your income protection policy, the only reason why it will end is because:

  • Your policy has expired which means the policy has been cancelled due to you not paying your premiums or cancelling the policy yourself.
  • You have returned to work due to your injury or illness becoming better, allowing you to work.
  • You have passed on and your policy doesn’t include any beneficiaries.
  • You have breached your contractual agreement. Your insurer can cancel your policy if you have breached the agreement that is outlined in your policy or if you have handed in false information.

Did you find this page helpful?

Yes
No
Thanks for your feedback!

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.

In this article

Share this article

Share on facebook
Share on twitter
Share on linkedin
Share on email
Share on pinterest

Looking for a life insurance quote?

Compare with Savvy and save on your life insurance purchase.

* Terms and conditions and lending criteria applies.

Smart money saving tips

Subscribe to our newsletter.

By subscribing you agree to our privacy policy

Related articles

Looking for a life insurance cover?

Compare a range of life finance options with Savvy from a panel of reputable insurers.