The Benefit of Day 1 Accident Cover on Your Policy

If you have an income protection policy, you generally must serve a waiting period before receiving your monthly benefit.  However, when adding the Day 1 Accident cover option, you can reduce your waiting period for accidents.

There are many variations of the Day 1 Accident Protection Cover option in the Australian market, and they’re not all the same, so you might want to carefully review your product disclosure statement (PDS) to determine the terms and conditions of your Day 1 Accident benefit.

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What is Day 1 Accident Cover?

Typically, Day 1 Accident Cover is an additional benefit option for income protection policies which allows you to start receiving a portion of your benefit during your waiting period should you be unable to work because of an accident. This benefit can be added to your policy for an extra fee and will generally pay one-thirtieth of your monthly benefit for every day that you can’t work for longer than the qualifying period (usually 3 consecutive days).

Take note: This option is generally only available with a waiting period of 14, 30, 60 or 90 days and only applies if you suffer from an accident and does not cover sicknesses.

How does the Day 1 Accident Cover Option work?

Day 1 Accident Cover pays a portion of your benefit if:

1You suffer from an accident

An accident is generally defined as a bodily injury directly and solely caused by a violent external and visible means, independent of all other causes.

2You are totally disabled as a result of the accident

For the purposes of income protection cover, total disablement is generally defined as when the insured is:

  • Unable to perform one or more duties of their occupation,
  • Under the regular care of and following the advice of a medical practitioner, and
  • Not working.

3Are totally disabled for the qualifying period

Depending on your insurer, the qualifying period could be as little as three consecutive days or, in some cases, they require you to be disabled for at least 30 days.

How much can I get paid?

You’ll generally receive 1/30th of your monthly benefit for each day of total disablement during your waiting period. For example, if you are totally disabled for 60 days and you have a 60-day waiting period, and you have a monthly benefit of $3,000, you can receive $100/day for 57 days. Typically, you won’t get paid for the first 3 qualifying days, as highlighted below.

When will the benefit start being paid?

Your benefit will generally start after your qualifying period, which might be classified as:

  • True Day 1: Benefit begins after 3 days of being unable to work after an accident. Meaning the insurer starts owing you money from the 4th
  • 14 Days: Some insurers require you to be off work for 14 days. They will then back-pay you to day 4.
  • 30 Days: The insurer demands you be off work for 30 days and will then back-pay you up to day 4.

Generally, most insurers will consider the start of your 3 consecutive days of total disablement when:

  • You have suffered an accident or injury, and
  • You first sought medical attention for the injury, where the doctor has confirmed that you are unable to work as per your policy terms and conditions.

Please consult your Product Disclosure Statement (PDS) for exact start dates.

When will the Day 1 Accident Cover benefit end?

Your benefits from this option will usually stop:

  • At the end of the waiting period; or
  • When you’re no longer disabled.

Important: If at the end of the Day 1 Accident Cover benefit you are still disabled; your regular monthly benefit will generally commence.

When should you consider adding the Day 1 Accident option?

This option may suit you if you need some form of financial support during the period before you’re able to start receiving an income from the normal monthly benefit payment under a typical income protection policy. For example:

  • You do not have an immediate source of disposable income to meet day to day living expenses,
  • You are self-employed, or
  • You have no or very little sick, or annual leave.
Published: January 3, 2019
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