Income Protection Insurance in Australia acts as a financial buffer, offering a replacement income stream for individuals who are unable to work due to illness or injury. Instead of directly replacing lost income, it provides a monthly benefit, typically up to 70% of the insured person’s pre-tax income. This benefit is designed to cover a range of financial commitments, including daily living expenses, medical and rehabilitation costs, mortgage or loan repayments, and even insurance premiums. 

This safety net ensures that individuals can prioritise their recovery without the added burden of financial strain. It provides a sense of security, allowing individuals to focus on regaining their health while maintaining their financial stability and meeting their financial obligations. Like most insurance coverages, it acts as a personal rainy day safety net. 

What does it Include? 

Each income protection policy has a definition of partial or total disability that must be met before a claim can be made, and it is important to check with your insurer for their specific definitions. 

Some of the most common things that income protection insurance cover includes: 

• Injuries or illnesses that prevent you from working, as long as they are not listed as a specific exclusion in your policy.
• A percentage of your regular income while you are unable to work, allowing you to cover your living expenses. 

Additionally, many policies offer coverage for rehabilitation services and ongoing medical treatments, providing a more inclusive safety net during your recovery period.

What is Excluded? 

While income protection insurance acts as an essential safety net for individuals in cases of injury, and illnesses it does not cover everything. It’s important to note that just like most insurance policies, income protection insurance has its own list of exclusions too. 

Here’s a list of the most common exclusions: 

Pre-existing medical conditions 

Many income protection plans have limitations or exclusions related to pre-existing medical conditions. It’s essential to disclose any pre-existing conditions when applying for coverage, as failure to do so could result in a claim being denied. 

Self-inflicted injuries 

Injuries that are intentionally self-inflicted are excluded to prevent individuals from taking advantage of their coverage. However, with specific providers, if an injury results from a mental condition, it might still be covered. 

Acts of war and terrorism 

Injuries or illnesses resulting from war are often excluded due to being too unpredictable and are broad in scope for standard insurance coverage. 

Criminal activities 

Participation in illegal activities typically will lead to exclusion from coverage for any resulting injuries or illnesses. 

Risky activities 

Income protection policies may exclude coverage for injuries or illnesses sustained while participating in activities deemed risky. However, what is specifically classified as ‘risky’ will vary between insurance providers. 

Unemployment 

Situations related to job loss such as seasonal, self-administered, or the end of a fixed-term contract unemployment are typically not covered. 

Voluntary elective surgery or treatment 

Some insurance policies exclude or limit coverage for elective surgeries and treatments that are not considered medical emergencies. 

It’s crucial to thoroughly review the terms and conditions of any income protection policy to understand the specific exclusions and limitations. Seeking advice from insurance brokers can be helpful in understanding these details and selecting the most appropriate coverage for you. 

Why Choose Morgan Insurance Brokers? 

At Morgan Insurance Brokers, our team brings extensive experience, knowledge, and expertise to the insurance industry.

Navigating the complexities of income protection insurance can be challenging, especially when seeking comprehensive coverage from a reliable source. That’s why we are dedicated to finding the best coverage at the right price tailored to your specific needs. By working with over 150 insurers, our experienced brokers ensure that you have a clear understanding of your options, enabling you to make informed decisions.

We have recently expanded our services to include income protection insurance because we recognize the critical importance of protecting your income during challenging times. This coverage helps ensure you can meet your rent or mortgage payments, manage daily expenses, and avoid relying on friends, family, or other external support.