Life Shield - Your Life, Your Protection, Personal Insurance

Income Protection - Finer Detail Series

Part 2 – Income Protection ‘Waiting Period Qualification Period’

In your search for the right Income Protection policy, it is important to consider a number of features that are offered by all companies – monthly benefit, waiting period, benefit period and other added benefits that you may like included in your Income Protection policy.

It is usually the case that the devil is in the detail when comparing products and this is certainly the case with Income Protection. This article explains the concept of ‘waiting period qualification period’ and how the differences between contracts can sometimes mean the difference between being able to make a claim or not on your Income Protection insurance.

Definition: ‘Waiting Period Qualification Period’ is a term that explains the set period within the waiting period that the life insured needs to be ‘totally disabled’ in order to be able to make a claim (for either a whole or partial benefit) once the waiting period has expired.

To increase your chance of making a successful claim you should try and have this period as short as possible. In fact, there are some Income Protection policies that do not require the life insured to be totally disabled for any set period during the waiting period. This means that as long as the life insured has been partially disabled for the waiting period, then a claim is possible to be paid.

Older Income Protection policies require the life insured to be totally disabled (not working at all) for the whole of the waiting period. On more recent policies, this is one of the differences between a standard and comprehensive policy and should be taken into consideration when deciding whether it may be worthwhile to go for the more expensive Income Protection policy.

Case Study: Josephine is a self employed book keeper. She develops RSI and even though she is receiving treatment, her condition means that she can not complete a full day’s work and she is falling behind with her workflow. Josephine’s doctor has requested that she stop typing for one month, however Josephine is concerned about cash flow. Josephine calls her insurance adviser wanting to make a claim on her Income Protection insurance (which has a waiting period of one month), however depending on the ‘waiting period qualification period’ within her policy, there are a few outcomes possible.

Income Protection Policy Waiting period qualification period
A The life insured is required to be totally disabled for the entire waiting period
B The life insured is required to be totally disabled for at least 10 out of the first 14 days of the waiting period.
C There is no obligation for the life insured to be totally disabled for any period throughout the waiting period.

Policy A: Josephine is required to be off work for the entire waiting period of 30 days before even a partial Income Protection claim is possible.

Policy B: Josephine can take the majority of the first two weeks off work and then become eligible for a claim payment on her Income Protection even if she is able to continue to work partially for the remainder of the waiting period.

Policy C: Josephine can continue to make phone calls and chase invoices and do other work that her doctor approves of and still be eligible for a partial claim at the end of the waiting period.

Conclusion: Compare your Income Protection policy! Have your policy reviewed to ensure that you have an understanding of the waiting period qualification period relevant to your policy. The shorter and less restrictive this period is, the easier it will be for you to make a claim on your Income Protection policy in the event of something going wrong. It may be worth an upgrade if you could fall into the same category as Josephine above!

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After having had my income protection, with a company based abroad, for the last 15yrs I recently decided to sort it here in Australia.(Now based here so it makes sense.)
Needless to say the thought of trying to get a similar product for a good price was a concern....

Dr S.T (BDSc)
Newman, WA.

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