What would you do if you couldn’t work due to illness or injury? Do you have a back-up plan? How long will your back up plan last?

Income Protection Insurance covers you if you couldn’t work due to illness or injury and helps you cover your normal day to day living expenses such as groceries, bills, mortgage and other debt repayments, and lets you focus on your recovery instead of worrying about how your bills are going to be paid.

Income Protection Insurance can be paid by your cashflow (known as Retail) or directly out of your super. There are a few options within Retail Income Protection Insurance. You can choose to be covered for the short term or for the long term (2 years, 5 years, to age 65) and you can choose to have a waiting period of 30 days or 90 days. Super Paid Income Protection Insurance usually covers you for only 2 years and it is only a very basic cover, so depending on your circumstances, it could benefit you to take out Retail Income Protection Insurance, if you haven’t already done so.

However, there are changes happening within Retail Income Protection Insurance and you may be wondering how this is going to affect you, whether you already have a policy or you are considering getting a policy.

Any Income Protection policy that you currently have will not change and will stay as is until you decide that it doesn’t meet your requirements anymore.

From April 1st 2020, ‘Agreed Value’ policies will no longer be available and all policies offered will be ‘Indemnity’, this means that all new policies will be based on your gross income at the time of your claim, no matter what income you disclosed at the time you set your policy up. This also means that if you change your job to a lower income and have to make a claim, your claim will be based on the new job.

Along with the above change there are other proposed changes from July 1st 2021.

  • Benefit caps – the first 6 months of your claim will be 100% of your income and then will drop down to 75% after 6 months if you are still unable to work. This is to encourage you to get back to work.
  • Policies to be renewed every 5 years – This is so that your policy remains up to date with your circumstances, as well as medical advancements. At renewal time, you can ask that your policy is to be renewed without a medical and only have your occupation and finances reviewed.
  • Stricter disability definition’s when looking at longer benefit periods.
  • Maximising the benefit payable to $30,000 per month.


Please speak to your financial adviser before making any decisions as you don’t want to cancel your policy if it is of more benefit to keep rather than change.