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Waiting Periods


Waiting periods feature in every income protection insurance policy in Australia.

What is the significance of a Waiting Period?

The waiting period is the period of time that you have to be off work due to sickness or accident before your benefit period commences.

How does the Waiting Period affect your premiums?

The length of your waiting period directly affects the cost of your premiums. Generally the shorter the waiting period, the more expensive your premiums will be.

The reason for this is that the shorter the waiting period, the less severe the sickness or accident needs to be to sustain itself for the full waiting period. This therefore makes it easier for you to claim on your policy, hence increasing the risk that the income protection company has to pay your benefit.

The longer the waiting period, generally the less expensive your premiums. This is because the longer the waiting period, the more severe the sickness or accident needs to be to sustain itself for the full waiting period. This therefore makes it harder for you to claim on your policy, reducing the risk posed to your income protection company of having to pay your benefit.

When does the Waiting Period begin?

For accidents, generally Day 1 of the waiting period is the day of the accident.

For sickness, Day 1 is the day that you consulted your doctor and were advised not to go to work.

However, this will be specific to the Product Disclosure Statement (PDS) of the particular income protection policy you take out.

Waiting Period Options

Waiting Period lengths are generally one of the following: 14, 30, 60, 90, 180 days, 1 year or 2 years.

Can these standard Waiting Periods be reduced?

Yes, the waiting period can be reduced in the following circumstances:

  • For accidents, the waiting period can be reduced down to 3 days with a Day 1 Accident Option, which is a paid option. This option only applies to accidents, if you succumb to a sickness your waiting period can’t be reduced under this option.

  • With the Bed Confinement Option, the waiting period can be reduced down to three days. The Bed Confinement Option is a paid option that requires you to be totally disabled and confined continuously to bed for at least 3 days during the waiting period.

Depending on the policy, with both of these paid options you will receive 1/30th of your monthly benefit every day from Day 3 up until the end of your waiting period.

Do you need a period of total disablement during your Waiting Period?

Generally you are required to be totally disabled for a specific number of consecutive days during your waiting period in order to be eligible for income protection payments. In general, income protection companies will consider you totally disabled if:

  • You are so ill or injured, that you are unable to carry out an income producing duty of your occupation

  • You are under the advice of or receiving medical treatment or care from a medical professional

Some insurance companies may include extra or varying conditions in their definition of total disablement, therefore it is important to read the PDS of your particular insurance company.

Partial disablement and Waiting Periods

Traditionally most income protection companies have generally required the insured to be totally disabled for a period of consecutive days during their waiting period in order to be eligible for a partial disability benefit.

However, recent changes to income protection policies have seen a growing number of income protection companies offering partial disability from Day 1 without a period of total disablement required during the waiting period.

In general, income protection companies will consider you partially disabled if:

  • You are able to work but are so ill or injured that you can only work at reduced hours or earning ability

  • You are acting under the advice or receiving care from a medical professional for the illness or injury in question

It’s important to refer to your insurance company’s PDS to confirm if total disablement is required under your policy before you are eligible to receive a partial disability benefit required during the waiting period.

Things to consider when deciding the best Waiting Period for you

  • Understand your financial commitments – it’s important to consider any loans and debts you currently have outstanding that rely on steady future income in order to be met.

  • How dispensable is your income – that is, how much money do you currently have at your disposal and how long could you survive relying on your accumulated savings in the event that your main income ceases?

  • Sick pay & annual leave – do you have accrued sick pay and or annual leave that you can rely upon in the event that you can no longer earn a steady income?

  • Premium affordability – paying premiums is a monthly commitment, therefore you must ensure that you have enough cash flow to meet premium costs. Taking into consideration the above points, you need to weigh up whether these ongoing costs justify the level of coverage you will receive in the event you are no longer able to work.

If you need assistance in finding the best waiting period for, or are interested in receiving an income protection quote, call 1300 135 205 to speak with one of our friendly advisors.