Income protection insurance helps cover your income in case of long-term injury or illness. Here’s more about what it is, how it’s calculated, and how to get help when making a claim for income protection.
What is income protection?
We rely on our income to pay for everything in life, but if you become ill or injured and are unable to work, income protection insurance can help.
Most full-time Australian employees receive just 10 days of sick leave per year, so if you are away from work for longer than that, you may start taking unpaid leave, or lose your position at work permanently following extended periods of sick leave.
In this case, income protection insurance will generally cover you for 75% of your income. This typically lasts for two years, or until a certain age, although each policy is different, so be sure to read the fine print.
There may be a waiting period between when you stop working and when you start receiving your payouts, so again, always be sure to read your policy.
How is income protection calculated?
Typically speaking, income protection is 75% of your income, but there are several caveats to this figure.
Firstly, you might agree to a different figure in your policy. You can opt for an ‘agreed value’ with your insurer, which allows you to decide how much cover you receive, although it is the more expensive option. The standard option is the ‘indemnity value’ which simply covers you for your monthly income.
As well as your 75% cover, you will usually also receive 10% of your income as a superannuation contribution so that your retirement savings don’t stop when you stop working.
Your level of cover can also be affected by any other benefits or payments you receive. This includes workers compensation and benefits from Centrelink.
Finally, your level of disability can also influence how much cover you receive. For example, if you are injured and become partially disabled but are still able to work, you may not receive the full amount.
Getting help when making a claim
Insurers are notorious for making the process of making a claim difficult, and for trying to avoid making payments. If you are having difficulties with getting payments from your insurer (or even for superannuation claims), you may benefit from the assistance of an income protection or superannuation lawyer.
As your law partners in NSW and ACT, Masselos & Co Lawyers can help you access the payments you deserve. If you think you have grounds to make a claim against your income protection insurer, get in touch with us for a free consultation and to learn more about how our experience and knowledge can help get you what you’re owed.