Income Protection Insurance Waiting Periods

An income protection insurance waiting period refers to the amount of time that you need to be off work (following the advice of a medical practitioner) before your benefit period commences. It generally starts on the day you have sought medical treatment/advice following a sickness or accident, and the Doctor confirmed you should not go to work.

Published May 16, 2022

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What is the waiting period for income protection?

The waiting period for income protection refers to the period of time in days you must be unable to work before your benefit period commences and depends on the agreed terms of your policy when you applied for it. Waiting periods vary and can generally range anywhere from 30 days to 2 years, after which your monthly benefit is paid in arrears.

Paying monthly in arrears means you may not receive your first payment for up to an additional month on top of your waiting period. Your insurer will then start to owe you money.

For example, if your waiting period is 30 days, you’ll generally only receive your first payment after day 60.

However, select insurers do allow you to go on partial disablement from the start of your waiting period, but these policies are very rare.

Income protection waiting period example

This 30-day waiting period example illustrates the timing of when a waiting period may start and when you could expect to receive your monthly benefit following the completion of the waiting period.

What are my income protection insurance waiting period options?

Your ability to earn an income is one of your greatest assets. Protecting that asset is key to ensuring you’re able to keep paying for your current lifestyle and securing your plans of retiring debt-free.

Income Protection provides a monthly benefit for people who are not able to return to work for a short or long period due to an illness or injury. You have the option to choose a waiting period that suits your circumstances and financial and familial obligations.

Depending on the insurer you could choose a waiting period of 30, 60, 90, 180 days, 1 year, or 2 years. Ideally, you would want to receive payment as soon as the injury or illness starts to affect your ability to pay for financial commitments, such as your mortgage, school fees, car payments etc.

How does my choice of waiting period affect my premium?

Generally the shorter you waiting period, the higher your premium will be, because it makes it potentially easier for you to claim.

Short waiting periodLonger waiting period
30 to 60 days90 Day, 180 days, 1 year, 2 years
Sickness or injury is usually less severe. For example, muscle or joint injury.Sickness or injury is generally more severe. For example, cancer or stroke.
Premiums are more affordable. Premiums are generally more expensive.
Receive your monthly benefits sooner.You’ll have to wait longer to receive benefits.

How does my waiting period affect my ability to claim?

You can’t claim income protection payments straight away after becoming ill or injured. You will receive your benefit once your claim has been accepted and your waiting period has been completed.

The longer your waiting period is, the more likely you are to recover before your waiting period ceases, so it’s more difficult to claim. The shorter your waiting period, the more likely you are to be still unable to work and thus receive benefits.

Case study

Alex, the non-smoking white-collar clerical worker, is a 35 year old male living in NSW and earns an annual income of $96,000.

The below illustration provides a monthly benefit of $5,600), on an indemnity policy with a benefit period to age 65.

Waiting PeriodBenefit PeriodMonthly BenefitPremiumPremium as % of Salary
30 daysTo age 65$5,600$46.140.69%
60 days To age 65$5,600$48.570.73%
90 days To age 65$5,600$31.750.48%
180 days To age 65$5,600$40.080.60%
365 days To age 65$5,600$28.560.43%
730 daysTo age 65$5,600$25.390.38%

Source: Life Insurance Direct Comparison Engine (February 2022; Premium estimates for a 35-year-old non-smoking male living in NSW)

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How long before I can claim my income protection?

You can lodge a claim on your income protection the moment a Doctor or medical professional confirms that you cannot work due to an injury or illness. A doctor will generally provide you with an indication as to how long you can expect to be off work for. This will help you determine if your time off work will be longer than your waiting period, to help you decide whether or not to lodge a potential claim.

Most income protection policies require that you have a period of total disablement, usually a week to 14 days. Meaning, you need to be totally off work before being potentially eligible for the waiting period to begin. After that, you generally can go on a partial disablement claim if required.

The number of consecutive days required to be totally unable to return to work will differ between insurers. It’s important that you read through the product disclosure statements (PDS) of the insurers you’re considering, to see what each one offers.

When does my waiting period for income protection insurance start?

Your waiting period does not start when the injury or illness occurs, only when the medical professional says you should not work as a result of the sickness or accident will you waiting period start.

For example, you’ve had back pain for the last two months after a serious fall, but you’ve been ignoring it, choosing to work through the pain. Eventually, your sick leave is depleted, and you don’t want to use your annual leave. Finally, you decide to see a Doctor about the back pain. Only then, when the Doctor states you cannot work and should take time off, does your waiting period start.

How long will my Income Protection last?

Generally, your income protection policy will pay out a monthly benefit for the duration of your benefit period. Your benefit may be for a period of between 2 and 5 years or up to a certain age, for instance up to age 70. It’s generally a good idea to compare all of your requirements before choosing cover.

Can I get income protection with no waiting period?

In general, all income protection policies have a waiting period that is required, and income protection no waiting periods are not available. However, there are a few features that may come included in your policy or you may choose to add. Optional benefits that you may be able to include in your policy include claim indexation, severity boosters or super contribution options

Which waiting period should I choose?

Consider the following factors before choosing a waiting period:

  • Your employment status.
  • Affordability of premiums.
  • Upcoming financial commitments.
  • Leave entitlements.
  • Savings.
  • Saleable assets.

Your choice of waiting period for your income protection policy will largely depend on your employment status. A full-time employee might prefer a longer waiting period, which will result in a cheaper premium because they are entitled to sick leave and annual leave.

You also need to take into account your obligations. For example, if you have some money saved and do not many expenses to worry about, you might decide on a longer waiting period to lower your premium. On the other hand, if you are self-employed and do not have savings, a shorter waiting period with an added Day 1 accident option benefit might be more suited to your needs.

The 2 year waiting period is usually a popular choice with people who hold part of their income protection within their Superfund. However, when a policy is held inside Super, you must meet the policy definition of your claim, as well as the Super’s condition of release to get your money outside the superannuation environment and into your pocket.

To make your decision easier, you can compare one of 7 waiting period options using our income protection comparison tool, or if you have any questions, please ask these below.

Frequently Asked Questions and Answers

  • Does income protection have a waiting period?

    Yes, generally when you purchase an income protection policy you’ll be given the option to choose the waiting period on your policy. A waiting period in income protection is typically a fixed time during which you must be off work for your policy to start ‘accumulating benefit’. Waiting periods generally vary anywhere from 30 days to 2 years. During the waiting period, you might have to rely on your sick leave if permanently employed, and/or your savings.
  • Does income protection get backdated?

    Yes, typically you’ll only recieve your income protection claim as a backdated payment after your waiting period has ended. Generally, insurers will pay your claim in arrears one month after your waiting period has ended. Contact us to learn more about how your income protection waiting period will affect you.
  • Can I get no waiting period income protection?

    No, typically there aren’t any no waiting period income protection policies currently available. However, you may have the option to add additional benefits to your policy which could help you when you’re unable to work. Adding the Day 1 Accident cover option to your policy typically offers your the option to protect a certain portion of your income during the waiting period.

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