Many Australians will have some form of income protection insurance. If you’re unsure what it is, it is an insurance policy that will pay a percentage of your wages if you cannot work due to an accident or illness. The idea of having a steady cash flow in difficult times makes this insurance policy one of Australia’s most popular. However, when should you claim? Is it always worth it? What will it cover? Today, we will discuss some of those burning questions and give you a brief rundown of income protection insurance.
What income protection insurance should cover
Income protection insurance usually covers up to 70% of your salary when you are unfit for work. The duration can span between a few months or several years, depending on the policy you have. To claim, you will need to be unable to work due to one of the reasons that will be listed in your policy. Some examples of this are illness or injury, disability, or rehabilitation.
When should you claim your income protection insurance?
If you have income protection insurance, you should claim whenever an illness or injury prevents you from going to work for an extended period. Of course, it isn’t going to cover you for taking a week off with the flu, but it is there for almost any serious reason. So, as long as it is an extended absence from work, you should be ok. Most policies will also cover you for any recurring conditions that you might have, disabilities that can worsen and prevent you from working, and specific rehabilitation and medical expenses that may help you get back into work.
When will I be covered by income protection insurance?
In short, you will be covered for any illness or injury that is unexpected. However, if it is something that you had before claiming the insurance, it will not be covered. Depending on your policy, you may have a specified waiting period before it is possible to claim. All in all, you should be covered for most things on your income protection insurance plan. However, it is good to note that you are unlikely to have a successful claim on the following: Self-inflicted injuries, unreported circumstance changes, specific policy exclusions, and, as we mentioned before, pre-existing conditions.
So, is it always worth claiming income protection insurance?
Keeping it brief, if you’re eligible, it is usually worth claiming on your income protection insurance. Unlike most insurance policies, premiums are unlikely to rise if you claim. However, they can offer no claim bonuses or discounts. There isn’t much that can give you financial security like this, so if you need to, it is worth filing a claim and allowing yourself the time you need to get back on your feet. Income protection insurance is there to support you, so let it.