Income Protection

Income Protection Insurance Cover protects the insured if, upon suffering a disabling event, they are unable to continue to generate their personal exertion income. This is important for those who rely on their ongoing income, rather than investment or passive income, to cover living expenses and service debt. Once issued, income protection policies are generally guaranteed to be renewable.

There are a number of industry income protection definitions:

Total Disability: To be deemed totally disabled, the insured person must satisfy three strict criteria. The life insured person must:

  1. be under the care of a medical practitioner;
  2. not work in their own or another occupation; and
  3. be unable to perform one of the important duties of their occupation.

Hours-Based Definitions: Hours-based definitions generally refer to the inability to perform an important duty for a set number of hours per week (such as ten hours) to qualify for a benefit.

Income-Based Definitions: An income-based definition requires the insured to be unable to generate a certain level of income (such as 80 percent of pre-disability income) to qualify for a benefit.

Partial Disability: A partial-disability benefit is payable when the insured is able to work to a limited extent to that which they had before suffering the event, or is employed in a lower-paying job, due to their disability. After a period of total disablement, if the insured person returns to work in a limited capacity, they may qualify for partial disablement benefits upon satisfying one of the following requirements:

  • they are under the care of, and following the advice of, a medical practitioner;
  • they are earning less than their pre-disability income; or
  • they are working in another occupation, but earning less than their pre-disability income, as a result of their illness or injury.