Income Protection and Redundancy

Generally speaking income protection policies protect up to 75% of your income if you are unable to work due to a sickness or accident. It is a policy designed to help you and your family meet your minimum obligations without succumbing to financial pressure.

Generally, most policies we compare at Life Insurance Direct Australia do not cover redundancy however there are two insurers (CommInsure & Onepath) who have limited cover for customers who currently have loans with their respective banks. The two limited options may provide limited redundancy cover is certain circumstances.

  1. OnePath Unemployment Benefit
  2. CommInsure Unemployment Benefit
  3. Joint Tenants vs Tenants in Common
  4. Waiver of Premium
  5. Carefully check Redundancy Cover offered by Direct Insurers
  6. Cost
  7. Less Flexibility


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OnePath Unemployment Benefit

If you become involuntarily unemployed for reasons other than sickness or injury, OnePath will pay the minimum monthly repayments for the following types of loans for a period of 3 months:

  • Home loans
  • Investment home loans
  • Business loans
  • Personal loans
  • Margin lending loans

In order to be eligible:

  • The loan must be with ANZ
  • You must be unemployed for at least 30 days
  • You need to be registered with an employment agency
  • Actively seeking work
  • Employed for at least six consecutive months before being made redundant

The following scenarios are specifically excluded:

  1. The person was aware of their involuntary unemployment prior to or was informed of their involuntary unemployment within 180 days of the policy start date.
  2. Immediately prior to becoming unemployed you were self employed, working for a family member, working in a business with less than 5 employees, working less than 20 hours per week or your employment was outside of Australia.
  3. Involuntary unemployment as a result of resignation, retirement, voluntary redundancy, termination of seasonal / casual work, abandonment of employment or dismissal due to serious misconduct

The maximum benefit payable under this option is the lesser of:

  • Your monthly benefit; or
  • Minimum loan repayment; or
  • $5,000

Please note that other criteria may apply at it is best to refer to the latest OneCare product disclosure statement or speak to one of our insurance specialists before before making any decisions.

CommInsure Unemployment Benefit

CommInsure will pay a monthly benefit which covers the minimum monthly repayments of a loan taken out with either the Commonwealth Bank or BankWest if:

  • If you have been employed for at least 180 consecutive days
  • You become unemployed for at least 60 consecutive days
  • Redundancy is involuntary

The amount paid will be 1/30th of your minimum monthly repayment for each day of unemployment after the 60 days.

The benefit will not be paid if you lose your job as a result of:

  • Voluntary redundancy
  • Casual, seasonal or temporary work ending
  • Deliberate or serious conduct

For CommInsure’s full terms and conditions please refer to their PDS

Joint tenants vs tenants in common

Different people will have different ownership structures and it is important to understand what the implications may be:

Joint tenants

Joint tenants each own the whole asset – they both own the asset equally. If one dies, the other owner automatically acquires the entire asset.

Tenants in common

Tenants in common each own a share of the asset outright. This does not necessarily need to be an equal share – one tenant can own 60% of the asset and the other owner 40%.

How does this affect my payment?

For loans with the Commonwealth Bank or BankWest, the minimum monthly repayments will be paid regardless of the ownership structure.

For loans with ANZ, the amount paid will depend on the percentage owned by the person on claim. For example if the person on claim owns 50% of the property, only 50% of the minimum monthly repayment will be paid.

Waiver of Premium

Select insurers will waive your premiums if you become involuntarily unemployed. This includes premiums for life, trauma, TPD as well as income protection. Premiums will generally be waived for a maximum of 3 months.

Carefully check Redundancy Cover offered by Direct Insurers

Select Direct Insurance companies offer redundancy cover as part of their income protection policies. However you should look carefully at such products if they seem too good to be true.

They also generally have a number of strict criteria that need to be met in order for you to claim:

  • You must be aged 18 – 60
  • You must have been working at least 20 hours per week
  • Your policy must be in force for at least 6 months
  • You must be out of work for at least 28 days
  • You need to have been employed for at least 6 consecutive months
  • Unemployment cannot be the result of sickness or injury, poor job performance, loss of qualifications or license, season employment, voluntary redundancy or a contract ending.
  • Cover is only available up to a maximum of $3,000 per month


Income Protection offered by Direct Insurers is generally significantly more expensive than a fully underwritten IFA (Independent Financial Adviser) product that we offer at Life Insurance Direct Australia.

Monthly insured amount Annual Premium
Direct Insurer $3,400* $692.03*
IFA Product $3,400* $432.11*

*Please note that while pricing is based on real pricing available, they are just examples only and may not reflect actual cover available. 

Less flexibility

The policies that are offered by Direct Insurers are often less flexible than the policies we compare. At Life Insurance Direct we:

  • Compare 12 of the leading life insurance companies in Australia
  • Offer a fully comprehensive comparison report of those brands
  • Provide policies which have flexible waiting and benefit periods
  • Provide policies which can be customised and tailored to fit your budget and circumstances
Published: August 15, 2014

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