Waiting Periods

The Income Protection Waiting Period is the period you are required to wait before your income protection monthly benefit period commences. It is an essential part of an income protection policy and a number of options will generally be available to you.

When does the waiting period begin?

The waiting period will generally begin on the day a medical practitioner says that you are unable to work. It is important to note that this might not be on the same day the accident occurs or sickness starts.

What are my options?

Generally insurers provide a number of waiting period options:

  • 14 days
  • 30 days
  • 60 days
  • 90 days
  • 180 days
  • 1 year
  • 2 years

Different insurers may offer different options and it is important to consult the relevant Product Disclosure Statement to see what each insurer offers.

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Short Waiting Period vs Longer Waiting Periods:

Short Waiting Periods:

Short Waiting Periods are generally more expensive than longer waiting periods as the less severe a sickness or accident needs to be in order for you to start receiving your monthly benefit should you need to make a claim. It essentially means you can start to receive your monthly benefit earlier.

Longer Waiting Periods:

Longer waiting periods are generally cheaper as the sickness or accident needs to be more severe in order to make it through the waiting period. You essentially start to receive your monthly benefit later.

When will my waiting period be reduced?

A number of options are available to help you reduce your waiting period:

Day 1 Accident Cover

Day 1 Accident Cover allows you to start receiving a partial benefit during the waiting period if you are totally disabled as a result of an accident. You can receive 1/30th of your monthly benefit each day you are off work and totally disabled during the waiting period.

Bed Confinement Option

If your sickness or accident confines you to a bed, you can start receiving a partial benefit during your waiting period. You can receive 1/30th of your monthly benefit for each day you are confined to a bed and are off work during the waiting period.

Factors you need to consider:

When deciding on which waiting period is most appropriate for you, there are a number of factors to consider:

  • Affordability of premiums
  • Upcoming financial commitments
  • Leave entitlements available including annual leave, sick leave and long service leave
  • Disposable income
  • Savings
  • Saleable assets

Partial disablement

Insurers generally also pay a monthly benefit if you are partially disabled rather than totally disabled.

In order to claim a partial disablement benefit, insurers will generally require you to have been totally disabled for a certain number of consecutive days during the waiting period. The number of days required to be totally disabled will differ between insurers. Select insurers may offer partial disablement from Day 1 of disablement. It is important to consult the relevant PDS to see what each insurer offers.

Case Study:

Terri is a psychologist who decides to take out an income protection policy. As part of her policy she decided on a waiting period of 14 days.

Several months later Terri is involved in an accident and breaks her leg, requiring her to have an operation and go through rehabilitation, resulting in her being off work for several weeks or a total of 43 days.

Terri is able to claim an income protection benefit for the 29 days she was unable to work after her waiting period expired.

Published: August 20, 2015
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