Income protection insurance: everything you need to know
Life can throw curveballs, and sometimes an injury or illness can leave you temporarily unable to work. But just because you’re off work, doesn’t mean the bills stop — that’s where income protection insurance can help.
Below, you’ll learn exactly what income protection insurance is, how to file a claim, and how much compensation you can expect. If you’d rather chat with a lawyer right away, just reach out. We’re always here to offer free legal advice tailored to your situation.
What is income protection insurance?
Income protection insurance does exactly what it says on the tin: it protects your income if you can’t work.
Many people have income protection insurance automatically included in their super policy — but you could also have it through a separate insurer, as part of your union membership, or even tied to the terms of your mortgage or car loan.
If you’re not sure whether you have income protection insurance, check the details of your policies or contact us today. We can examine all your policies and identify the benefits you’re entitled to, completely free of charge.
What does income protection insurance offer?
If you’re off work for a while, income protection insurance typically offers:
- Regular wage-replacement payments, usually made monthly.
- Up to 90% of your income (plus superannuation) for the first six months, then 75% after that.
- Payments for a specified duration, such as 2 years, 10 years, or until retirement.
The amount you receive depends on what type of policy you have:
- Indemnity value policies: cover a portion of your income based on your earnings from the 12 months before your condition developed. If your salary varies, the insurer averages your earnings to determine compensation.
- Agreed value policies: provide a fixed amount of compensation agreed upon when you took out the insurance.
Do I need income protection insurance?
While anyone who earns a wage can benefit from income protection insurance, it’s especially crucial if you are:
- Self-employed and don't have access to sick or annual leave.
- The primary breadwinner for your family.
- Responsible for outstanding debts or payments e.g. a mortgage.
How do I buy income protection insurance?
You can get income protection insurance from most super funds and insurers. Before buying a policy, it’s always a good idea to shop around to ensure you get the best coverage. During this process, you may need to supply some personal details to the super fund or insurer. This includes your:
- Age.
- Type of employment.
- Income (including salary, bonuses, stock options, casual wages, etc.).
- Medical history (e.g. heart attacks, strokes).
- Lifestyle habits (e.g. smoking, drinking, sports).
Providing this information helps your insurer assess your lifestyle and determine the appropriate level of coverage. While sharing personal details can be uncomfortable, it’s crucial for securing the right financial protection for you and your family.
How to make an income protection claim
If you’re injured or ill and unable to work, you can make a claim against your income protection insurance. Here’s a general overview of how this works:
- Notify your super fund or insurer: once you let them know you’re making a claim, the fund or insurer will send you the necessary forms. At this stage, it’s a good idea to speak to a lawyer about your situation. We can pinpoint any challenges your claim is likely to face and explain the best strategy to overcome them. This ensures your claim progresses smoothly and isn’t derailed by avoidable issues.
- Gather medical evidence to support your claim: this includes certificates or reports from your doctor detailing your illness, injury, or disability and its impact on your work. We know this process can be overwhelming and costly, so we’re here to help. Our lawyers understand exactly what evidence is needed for your claim and can gather it for you. Plus, we cover the cost of medical assessments and other expert evidence, so you won’t have to spend a cent out of pocket.
- Fill out your claim forms: make sure to provide honest information about your condition, your work before the injury, and how long you’re expected to be off work. If you’re unsure about any part of the form, a lawyer can help. We’ll make sure your claim is accurate and meets all the requirements of your policy.
- Submit your claim: submit your claim form and supporting documents to the fund or insurer. You can usually do this electronically or by mail, depending on their preference.
- Wait for the fund or insurer’s decision: they will review your claim and the evidence you’ve provided. During this process, they might ask for additional documentation or request an independent medical exam to evaluate your condition. Importantly, you don’t have to do everything the insurer asks — a lawyer can help you push back on requests and make sure you only undergo essential tests.
- Receive a decision: after assessing your claim, the insurer will make a decision. If approved, you’ll start receiving payments quickly. If your claim is denied, the fund or insurer must explain the reasons for their decision. The good news is, a denied claim is not the end of the road — you still have other paths to compensation. We’ll explore what to do after a denied claim in more detail below.
How long do I need to wait before starting a claim?
Most income protection insurance policies include waiting periods, which are the number of days you need to wait before you can file a claim. This typically starts when your doctor confirms you’re disabled due to an injury or illness.
The length of the waiting period can vary greatly depending on your policy. Generally, more expensive policies have shorter waiting periods, while cheaper ones have longer ones. Waiting periods can range from as little as two weeks to as long as two years — a significant difference when you’re without income.
To make an income protection claim, you must still be unable to work at the end of the waiting period.
What should I do if my claim is denied?
If your income protection claim is denied, the insurer will send you a letter outlining their reasons. But don’t worry, this isn’t the end of the road — you’re entitled to request a review of the decision. It’s wise to consult a lawyer before doing so, especially if you filed your initial claim without legal assistance.
In our experience, insurers often deny claims from unrepresented people by challenging medical evidence, saying their condition was pre-existing, or arguing that their policy should be cancelled due to non-disclosure or fraud. Our expert lawyers are familiar with each of these tactics and know how to counter them effectively.
As part of this process, we’ll gather extra evidence about your condition and how it aligns with your policy’s terms — making it much more difficult for the insurer to uphold their decision. This thorough approach has helped us successfully overturn hundreds of denied income protection claims.
What happens if I go back to work?
Income protection insurance policies often include return-to-work clauses, which means your payments typically stop once you go back to work full-time. However, if you go back to work part-time or you’re working less than usual, some policies offer ‘partial disability benefits’. These are smaller payments that top up your income rather than providing the full benefit.
To find out exactly what you’re entitled to, check your policy or consult with a lawyer. We can help you understand your policy’s return-to-work clauses and how they might impact your payments.
Could I have any other claims?
As part of our comprehensive service, we identify any additional claims you may be eligible for. These extra claims can often be worth much more than your income protection alone, ensuring you get the maximum compensation for your injury or illness.
Workers compensation claims
If your injury or illness happened at (or because of) work, you may have a workers compensation claim. It doesn’t matter how the accident happened — so long as you’ve lost income, undergone medical treatment or experienced some other financial loss.
Most workers compensation claims cover key entitlements, such as:
- Weekly payments (up to 95% of your pre-injury income).
- Medical and hospital expenses.
- Rehabilitation, counselling, and other support services.
- Travel costs related to your injury.
If your injury is serious, you may also be entitled to a lump sum payment. In NSW, for instance, you’ll need at least 11% Whole Person Impairment (WPI) to qualify.
Common law damages claims
If your injury or illness was caused by your employer’s negligence, you may have a common law damages claim. A successful claim provides a substantial lump sum payout, worth hundreds of thousands of dollars. If your condition is serious, you could receive millions.
The exact amount of compensation you receive is based on several factors, including:
- The seriousness of your injury.
- How your injury affects your ability to work.
- Your future employment prospects and capacity to earn.
Total and Permanent Disability (TPD) claims
If your injury or illness becomes permanent, you might qualify for a Total and Permanent Disability (TPD) claim. While income protection and workers compensation offer temporary financial relief, a TPD benefit provides a large lump sum intended to support you for life. Like income protection, TPD insurance is often automatically included in your superannuation policy — so you could already be covered without knowing it.
How we can help you
Income protection claims can be complex, and securing your full entitlements is rarely as simple as filing a claim.
To ensure you receive your benefits quickly and in full, you need strong legal representation. Voted ‘Compensation Law Firm of the Year 2020,’ we have the expertise to protect your rights and make sure you get every dollar you’re entitled to — including any extra payouts like workers compensation and TPD.
Plus, with our No Win No Fee Guarantee, your claim is risk-free. There are no upfront fees, and you won’t pay anything unless we win your case.
Reach out to us today for free advice on your income protection claim. We’ll figure out if you’re eligible, how much you can claim, and how to get the most compensation for your condition.
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