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Income Protection Waiting Periods and Benefit Periods, Explained
Written by Safety Nest
The short answer
Every income protection policy has two numbers that shape when it can pay, and for how long. The waiting period is how long you wait before payments start. The benefit period is the longest payments can keep going, if you remain unable to work. Both are set when you take out the policy, both affect what you pay, and both are worth checking before you ever need to claim.
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Income Protection Waiting Period vs Benefit Period
Read the transcript
What are the waiting period and the benefit period in income protection? The waiting period is how long you wait before payments start. The benefit period is the longest they can keep going, if you remain unable to work.
Together, they shape when it can pay, and for how long. And there are three things worth knowing. Let's walk through it with Jess, our example.
Jess is a dental nurse with a few weeks of sick leave, and income protection through her super. Say she's injured, and she can't work for months. Her income protection is designed to pay part of her lost income.
But not from day one. The first thing is the waiting period. It can be between fourteen days and two years.
Most often it's 30, 60 or 90 days. At the end of it, she must still be unable to work to be eligible. If she's back at work before then, she may not be paid.
Moneysmart suggests asking yourself: how long could I manage without my usual income? The second thing is the benefit period. Most policies offer two or five years, or up to a specific age, such as sixty-five.
If she still can't work when it ends, her payments may end too. Both periods are features that affect the cost of a policy. The third thing: where her policy sits.
Hers is inside her super. Some super funds automatically give you income protection, and the premiums reduce your retirement savings over time. And by law, funds cancel insurance on accounts with no contributions for at least sixteen months.
Outside super, a policy might allow a higher amount and more features, but you pay the premiums yourself. Either way, each policy has its own definition of disability, and conditions to meet before a claim. So would Jess's pay?
If she's still unable to work at the end of her waiting period, and she meets her policy's conditions, it may. For as long as she can't work, up to the end of her benefit period. Think about yours.
How long could you manage without your usual income? Then check your waiting period, your benefit period, and whether your super account is still active. Not sure what yours says?
We can go through it with you. We're Safety Nest. Five stars on Google, and we've helped hundreds of Australians with their life insurance.
We advise across major Australian insurers. Booking takes a few clicks. Pick a day, then a time, add your details, and it's confirmed.
It's a no-obligation consultation, and there's no fee for this meeting. If you take out a policy, the insurer pays us a commission, and you pay the premiums. Book a time at safetynest.
com.au.
What is a waiting period in income protection?
Income protection is designed to pay part of your lost income if you can't work because of illness or injury. It doesn't pay from day one. The waiting period is the time before payments can start.
A waiting period can be between 14 days and two years. Moneysmart says it's most often 30, 60 or 90 days.
There's a condition attached. To be eligible for payments, a person generally needs to still be unable to work, because of their illness or injury, at the end of the waiting period. Someone back at work before it ends may not be paid for that time off.
A useful question to ask yourself, from Moneysmart's own checklist: how long could I manage without my usual income? Sick leave, savings and other support all come into it.
What is a benefit period?
The benefit period is how long you keep getting monthly payments, if you remain unable to work. Moneysmart says most policies offer two or five years, or up to a specific age, such as 65.
If you still can't work when your benefit period ends, your payments may end with it.
Do they change the cost?
Yes. Moneysmart lists the waiting period and the benefit period among the features of a policy that affect its cost. Which combination suits you depends on your circumstances, including your savings, your leave and how long you'd need support.
Income protection through your super
You may already hold income protection through your super fund. Some funds give it to members automatically. The premiums come out of your super balance, which reduces your retirement savings over time. If you hold it in more than one place, it's worth reading am I doubling up on income protection?
Insurance in super can also stop. By law, super funds cancel insurance on accounts that have had no contributions for at least 16 months, and some funds have their own rules for low balances.
Policies held outside super might allow a higher amount and more features, but you pay the premiums yourself.
Either way, every policy has its own definition of disability and its own conditions to meet before a claim. Your waiting period and benefit period are set out in your policy documents.
Check yours
- How long could you manage without your usual income?
- What is your waiting period?
- What is your benefit period?
- If your income protection is in super, is the account still active?
FAQs
Frequently asked questions
How long is a typical income protection waiting period?
Waiting periods can run from 14 days to two years. Moneysmart says they are most often 30, 60 or 90 days.
Do I get paid for the waiting period?
Generally not. Payments start after the waiting period ends, and only if you are still unable to work because of your illness or injury at that point.
What happens when my benefit period ends?
If you're still unable to work when the benefit period ends, your payments may stop. That's why the length of the benefit period matters.
Does a longer waiting period make income protection cheaper?
The waiting period is one of the features that affects the cost of a policy, along with the benefit period. How much it changes depends on the insurer and your circumstances.
Can my income protection in super be cancelled?
Yes. By law, super funds cancel insurance on accounts with no contributions for at least 16 months, and some funds have their own rules for low balances.
Protect your future
Protect your family's financial future
Ready to check your waiting and benefit periods? Not sure what yours says? Your specialist can go through it with you. It's a no-obligation consultation, and there's no fee for this meeting. If you take out a policy, the insurer pays us a commission, and you pay the premiums. Click Get Started to book a time.