When you compare income protection it is vital to know the exact definition of certain terms, the main one being the term disability. While you would think that such a term could only have one meaning, there are actually three different ways this term can be interpreted, so it’s important that you find out in your comparison of income protection insurance exactly how that term is defined. The three definitions are: –
- Duty based disability: this means that if you have several duties within your employment role your disability must prevent you from working at the most important one or more. If you can do the most important duty but not some of the lesser ones, then you may not be paid.
- Income based definition of disability: this simply means that your income must have dropped as a result of your disability. If it has not, then you would not be paid.
- Disability based on number of hours worked. To be paid you must not be able to work for a certain number of hours per week.
Other things to look for when comparing income protection insurance Australia are the additional features and benefits of each policy; the cost of the premiums; the waiting periods – the shorter the waiting period is; the higher the premiums are likely to be; whether there is a partial disability benefit; whether there is indexed income and payment so that you keep up with inflation and many other things.
An important part of your comparison should be whether there is a recurring disability benefit. If your disability recurs then there may not need to be a new waiting period, but payment could be recommenced immediately. This would be an immense benefit to those who suffer from ongoing illness.
Another benefit to look for would be in the area of superannuation benefits. If you stop work you employer will stop paying into your super. With this optional benefit the payments will continue.