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What is Income Protection?

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    26 July 2019

    Income Protection – also known as Salary Continuance benefits – refers to a type of insurance which provides you with an income stream for a defined period if you are unable to work due to illness or injury. Similar to Total and Permanent Disablement (“TPD”) benefits, Income Protection benefits can be held within superannuation or they can be held directly through a private insurance policy. 

    Whilst policy terms and entitlements may vary between insurance policies, Income Protection benefits are generally paid as a monthly benefit, which is 75% of your pre-disability income. Given that you can no longer perform your occupation due to your medical condition and that you are under the regular care of a doctor, these benefits may be paid for 2 years, 5 years or until the age 65.

    When will I start receiving payments?


    When making an Income Protection claim, it is important to note that benefits will not usually be paid immediately after you cease work. This is because you must satisfy the “waiting period” requirements of the Policy – that is, the time you must wait, once your claim is accepted, before you begin receiving the monthly payments.


    Whilst each insurance policy is different, waiting periods can vary from anywhere between 14 to 90 days. Even with these waiting periods, it is important to note that in most cases, payments will not automatically commence as soon as the waiting period has expired. This is because the Income Protection claim may still be under assessment and further material such as pay records or medical material may be sought out by the insurer. 

    I am only partially incapacitated. Can I still claim Income Protection benefits?


    The simple answer is yes. Under most Income Protection policies, you may still be able to claim a benefit even if you are partially disabled from working.


    To be eligible to claim a partial disability benefit, you must generally be totally disabled for a certain number of days and then return to work in a different capacity. This may include working reduced hours or part-time, on light duties or in a lower paid role. Accordingly, your Income Protection insurance will then supplement your income and
    essentially top you up for your reduced ability to work.


    It is important to note that the definition of “partial disability” will vary between insurance policies. It is therefore crucial for you to check your own insurance policy and product disclosure statement to see how this, and other like terms, are defined.


    I am receiving weekly payments from WorkCover/TAC. Can I still make an Income Protection Claim?


    It is extremely common for Income Protection policies to have an “offset” clause. This means that any income protection benefit payable will be reduced by any other disability income (i.e. WorkCover/TAC payments and/or Centrelink). For example:

    If you are eligible for an IP insurance benefit of $3,000 per month and receive worker’s compensation payments of $3,200 per month, then your IP benefit may be reduced to a $0 payment (note: you may still be entitled to superannuation contributions). 


    What if the insurer doesn’t pay my Income Protection claim?


    Superannuation funds and private insurance policies vary significantly and therefore, these types of claims can be difficult to navigate. Unfortunately, there are many people who deal with their own Income Protection and TPD claims who ultimately have their claim rejected and do not receive any of their entitlements.


    Insurers may refuse to pay you your Income Protection benefits on the basis that a doctor says you can return back to work. Alternatively, your claim may be rejected, and the Insurer may try to cancel your insurance policy on the basis of non-disclosure or that you were suffering from a pre-existing condition.


    In our experience at Zaparas Lawyers, these problems can often be overcome by formally disputing the Insurer’s decision or by issuing proceedings in court and litigating your claim. 

    Why should I choose Zaparas Lawyers?


    Most people claiming an Income Protection or TPD benefit do so because they cannot work due to injury or illness. If you are suffering from a physical injury, illness or mental health condition, it is likely that the administrative demands and complex nature of the claim process can be overwhelming and difficult to deal with.


    If a lawyer is involved in your claim, it is more likely that the evidence in support of your claim will be properly prepared and there will be less hassles with the fund or insurer. It is important that you have someone who not only understands how to read, and interpret the insurance policy, but can ultimately guide you through the claims process.


    At Zaparas Lawyers, our dedicated superannuation and insurance lawyers are experts in this area of law and can guide you through the claim process on a no-win, no-charge basis. We will review your Income Protection and TPD entitlements under your insurance policy and assist you in maximising your full entitlements.

    Contact our office today on (03) 8527 0200 today for your initial obligation-free appointment.

    *This piece was written by Loredana Trimboli, Lawyer in the Zaparas Lawyers Superannuation team.