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Income Protection: Can an Insurer stop paying my benefits?

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What is Income Protection?

Income protection insurance is a type of policy that provides financial support to those who are unable to work due to illness or injury.

In Australia, income protection insurance is typically offered as an optional add-on to life insurance policies, or as a standalone policy. It is designed to provide policyholders with a regular income to help cover their living expenses while they are unable to work due to illness or injury.

There are certain circumstances under which an insurer may stop paying you income protection benefits in Australia.

Why your insurer will stop paying you income protection

  • You have reached the maximum benefit period under the policy

Most income protection policies have a maximum benefit period. This is the length of time that benefits will be paid to you – for example, 2 years. If you have reached the maximum benefit period, the insurer will stop paying benefits.

  • You have returned to work

If you have recovered from your illness or injury and are able to return to work, the insurer will typically stop paying benefits.

  • You do not meet the policy requirements

Income protection policies often have certain requirements that you must meet in order to continue receiving benefits. For example, the policy may require you to undergo regular medical examinations or to provide evidence of their ongoing inability to work.

Alternatively, the Insurer may no longer believe that you are unable to work due to your medical condition. If you are not medically supported as having no work capacity, your benefits may be terminated.

  • Avoidance of the policy on the basis of non-disclosure

If the Insurer believes that you did not disclose certain medical conditions at the time you applied for the insurance cover (non-disclosure), then they may seek to avoid the policy. This means that they will act as though the policy never existed. They will not pay income protection benefits to you.

  • The policy has lapsed or been cancelled

If you cancel your income protection policy or it lapses at age 65, the Insurer will stop paying benefits.

What do I do if an Insurer terminates my income protection payments?

If an Insurer terminates these payments, it is important that you seek legal advice as soon as possible.

The Superannuation and Insurance Team at Zaparas Lawyers has a wealth of experience in successfully helping clients achieve the outcomes they deserve. Ensuring that they are supported through the entire process. At Zaparas, will advise you of your rights and the merits of appealing the decision. This may include taking the Insurer to court.  

Find more blogs about Superannuation below:

WorkCover and TPD, Can you claim both at the same time?

Different Types of Superannuation Insurances Explained

What to do if your TPD claim is rejected

Understanding TPD insurance through superannuation

If you are from Queensland you can learn more on our Queensland Superannuation Page