“I have been unable to work for over two months now because of a health condition triggered by contracting Coronavirus. Can I access my income protection insurance?”
- Question from Amy in Melbourne, VIC
Top answer provided by:
Thank you for raising this question, Amy. As to whether you will be eligible to make the claim you ask about, several questions need to be considered. Assuming for the moment that you were employed at the time that you contracted Coronavirus, they include –
- What is the nominated waiting period on your IP policy?
- Does your IP policy define occupation as ‘own’ or ‘any’?
- Do you currently have entitlement to, or are you in receipt of, sick leave from your employer?
- Are there any exclusions nominated in your policy? (Exclusions can be specific to your health or family health history, or be general, that could preclude a claim under circumstances of a pandemic or the consequences of contracting an illness declared as a pandemic.)
How might the answers to these questions impact your eligibility to claim against your IP policy?
IP Insurance policies nominate a ‘waiting period’ from the commencement of the illness or incapacity precluding returning to work (whether full-time or part-time) until a claim can be made. Traditional waiting periods are 30 or 90 days but can be as short as 14 days and in some superannuation environments that waiting period can be 2 years or more. (The shorter the waiting period, the higher the premium payable to hold the policy.) Whatever the waiting period on your policy, most policies don’t allow for payment of the benefit until 30-days after the waiting period has elapsed.
Definitions are used in insurance policies to set the parameters around what is actually insured: they make it clear what constitutes an eligible claim against the policy. In the case of IP policies (as well as with TPD policies), the occupation claim eligibility is classified either as ‘own occupation’ or ‘any occupation. An own occupation policy is much more certain as to how you qualify for a successful claim (but will have a higher premium cost than any occupation policy): any occupation policy will impose a requirement on you to attempt other types of work that you are either skilled to be able to do, could be reasonably trained to do, or other ‘return to work’ criteria that would need to be exhausted before being able to claim on the policy.
When it comes to what benefit you will receive after establishing an eligible claim, other payments received concurrently may impact the amount that you will be entitled to receive from the insurer. If you are entitled to ‘sick leave’ after the waiting period has expired, the money so received will be part of the insurer’s determination as to how much they are required to pay you.
It is highly unlikely that there will be a general exclusion because of an interruption to earning capacity consequent to the contraction of COVID-19 in a policy issued by an Australian insurer – but you should read the fine print in your policy, just in case. You did however say that the condition was ‘triggered by’ you having contracted Coronavirus: if that ‘condition’ was something that could have been identified, should have been identified, or indeed was disclosed as latent to you by way of close-family history, there may be an exclusion that the insurer could apply (possibly even if not specifically ‘excluded’ at the time the policy was issued).
If the financial adviser through whom the policy was acquired is no longer available to you, most financial advisers with experience in insurance products should, on examination of the policy documents, be able to help you establish your eligibility and/ or entitlement to make a claim.
While the Adviser Ratings Website facilitates the question and answer functionality, all such communications are between users and authorised financial advisers, of which Adviser Ratings has no affiliation. Adviser Ratings is not the advice provider and does not provide financial product advice and only provides information that is general in nature.