How to claim income protection
Income protection benefits are sometimes also referred to as salary continuance benefits or total and temporary disability benefits. As their names suggest, these benefits provide an alternative source of income for you to live on if you are unable to work due to illness or injury. As with Total and Permanent Disability (“TPD”) benefits, income protection benefits can be held in superannuation accounts or they can be outside of superannuation in private insurance.
Are all income protection benefits the same?
All income benefits exist for the same purpose; to provide you with a disability income if you get sick or injured and are forced to stop working permanently or temporarily.
But the terms and conditions of income protection benefits can vary a lot from policy to policy. For example, income protection benefits are usually paid as a monthly benefit, which is 75% of the insured person’s pre-disability income, capped at a set amount (the benefit amount).
However, sometimes benefits might be an agreed amount and not worked out based on an individual’s pre-disability income. Also, in some cases, the amount that you are paid is offset if you are paid other income from Centrelink, WorkCover or your employer (ie sick leave), but in other cases, this is not the case.
To claim income protection benefits, it's important to understand exactly what benefits you are entitled to receive. This can be confusing. In this blog, we address some frequently asked questions about income protection benefits and how to claim income protection.
What is a waiting period?
It is rare that income protection payments start right after you stop working. There is usually some delay before the payments start.
This delay is called the waiting period.
The amount of time that must pass varies from policy to policy. In most cases, it is either 14, 30, 60 or 90 days. Ordinarily, the shorter the waiting period, the more expensive the insurance.
How do I support myself during the waiting period?
This can be tough.
You may be able to rely on sick leave, long service leave or annual leave. Other times, you can claim Centrelink entitlements which can help while you wait for the waiting period to expire and your payments to start.
Also, in most cases, your payments will not start as soon as the wait period ends. This is because the claim may still be getting assessed during this time and beyond. Payments usually will not start until the insurer assesses and accepts the claim.
For how long will my income protection benefits be paid?
The time that benefits continue to be paid (the benefit period) varies from policy to policy. The benefit period can be 2 years, 5 years, until 60, 65 or 70 years old. Ordinarily, the longer the benefit period, the more expensive the insurance. Most Income Protection benefits which are held in super funds are 2-year benefits.
Can income protection benefits continue to be paid after I return to work?
It depends.
If you return to work doing all pre-disability duties, for the same pay and without restrictions, your payments will usually stop.
However, if you return to work in a reduced role and at a reduced rate of pay, a partial disability benefit will usually be paid. A partial disability benefit is a “top-up” payment which pays the difference between the relevant percentage of what you used to earn and the reduced income you are being paid due to your illness or injury.
Can more than one income protection benefit be paid at a time?
Sometimes.
Most policies allow for payments of up to 75% of pre-disability income capped at a certain amount.
If you have more than one income protection policy and the payments under policy #1 are less than 75% of their pre-disability income, it may be possible to claim on policy #2 up to the 75% payment limit.
If I claim a TPD benefit will my income protection benefits stop being paid?
Some policies state that income protection benefits will cease if a TPD benefit is paid, but this is not common. It will depend on what your policy says about this. If you are concerned, please get in touch and we will check.
Does claiming compensation under a statutory scheme (like WorkCover) impact on income protection benefits?
Each state and territory has a different state-based compensation scheme. Also, each income protection benefit is different in the way that it interacts with the various compensation schemes.
As a rule, if the compensation received from a state or commonwealth scheme is paid as income, it will impact your income protection benefits.
However, recent court decisions have found that your income protection insurer may not be able to offset your income protection benefits when you receive a lump sum settlement from WorkCover or similar schemes. If your insurer has reduced your income protection benefit after you received compensation from a scheme now or in the past, please get in touch for some free advice.
Get help from an income protection lawyer
As you can see, there are some grey areas in and around income protection.
At Berrill & Watson, we’re experts in all things “income protection and TPD claims”. If you’ve got a query about your claim, feel free to get in touch with today’s blog writer, Tom Cobban.
Or you can contact us directly by phone or email for free. It costs you nothing to find out what your rights and entitlements are.
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