Published 08 Aug 2017
Income protection is one of the country's most reliable insurance products. Statistics from the Australian Securities and Investments Commission (ASIC) revealed that just 7 per cent of claims are rejected, lower than any other type of life cover.
This type of insurance provides you with financial support during times when you are unable to work due to sickness or injury. You receive a monthly payment that constitutes a percentage of your gross salary - up to three-quarters in most cases - until you return to the workplace.
But what happens if your injury or illness is serious, resulting in a prolonged absence from employment? Is there a maximum payout to which you are entitled? Let's take a closer look at income protection policies.
Understanding your income protection product
Each income protection policy is different, so it's difficult to offer a one-size-fits-all answer to questions about maximum payouts for these products. Nevertheless, in our experience, policies typically have an overall limit of approximately $250,000.
Insurers may also put a time restriction on claims, meaning you will only receive benefits up to a specified date, which may be one, two or five years after you've stopped working. Other policies stop paying out when you reach a specific age, with 60, 65 and 70 years old commonly used in the industry.
Your total allowable payout may be different if you have a specialist product that also includes rehabilitation costs to enable you to get back on your feet quicker.
If you are unlikely to ever return to the workplace, you may consider making a total and permanent disability claim after your income protection stream runs out. These are lump sum payments designed to help you cover a range of costs that arise from your inability to work due an accident or illness.
Making an income protection claim
As mentioned, income protection claims are fairly reliable, but some people who are eligible for benefits are still rejected. Policy documents are often long and confusing, and claimants may give up rather than spend time and effort pursuing what they think is a lost cause.
However, if you believe you are entitled to income protection payments, please contact Gerard Malouf & Partners Superannuation Lawyers for more information on making a claim.
We can help you fight an insurer's decision through our no-win, no-fee guarantee, so that you can obtain financial support for any temporary injuries or illnesses from which you may suffer.