Trade Risk no longer deals in income protection.  This article contains general information only.

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All income protection insurance policies have a range of waiting periods to choose from.

In this guide we will look at the different waiting periods available, how they work and how they may affect you at claim time.

What is the Waiting Period?

The waiting period on an income protection policy is the period of time a tradesman (or any other worker) must be unable to work for before they are eligible for benefits from their policy.

If you had a policy with a 30 day waiting period, you would have to wait for 30 days before you were eligible to receive any benefits.

But that doesn’t mean that you will start receiving benefits after 30 days, as virtually all income protection policies pay their benefits monthly in arrears.

So although you are entitled to benefits (i.e. payments) after 30 days, you will not be paid for another month after that date.

Let’s take a look at the waiting period in action. For this example we are using a waiting period of 30 days and are assuming that you are still unable to work.

  • Day 1 – Your first day away from work due to injury or illness
  • Day 30 – The last day of your waiting period
  • Day 61 – On this day you will receive your first monthly benefit covering days 31 to 60
  • After this time you will continue to be paid each month until you are able to return to work

So even though you have a 30 day waiting period, you won’t actually receive any money until 61 days have passed.

There are ways to be paid sooner, and we will cover those later in this guide.

Waiting Periods Available

The waiting periods offered vary slightly from one insurer to the next, however the most commonly available options are as follows:

  • 14 days
  • 30 days
  • 60 days
  • 1 year
  • 2 years

For many people 30 days is the typical waiting period chosen. People who need to be paid sooner may choose the 14 day option, whilst those looking to save money on premiums may go with the 60 day option.

The one and two year options are typically used in conjunction with a second income protection policy.

For example you may have an existing policy with a two year benefit period which you do not want to cancel, so a second policy is established with a two year waiting period to kick in after the first policy has run out.

We won’t go into detail on why you might want two separate policies, but there are plenty of cases where this may be an appropriate strategy.

Getting Paid Sooner

Many people are unable or unwilling to wait for too long until they need to start receiving payments from their policy, and thankfully there are ways of being paid sooner.

Day 1 Accident Cover

A very popular option for tradies is known as ‘day 1 accident cover’. This option can be added to most income protection policies.

With this option your policy will pay you a lot sooner if you are unable to work due to an accident which occurs either on the job or away from work.

Instead of having to wait for the full waiting period, you will be eligible to start claiming from the first day of your absence from work.

The specific cover does vary between the different insurers, however typically it means that you will be able to receive your first benefit after only four days away from work, and you will earn payments from day one rather than day 31.

Because the specific cover offered under the ‘day 1 accident option’ does vary between insurers it is important to speak with your financial adviser (or Trade Risk) about the options on your individual policy.

Specified Injury Benefit

Many of the policies offered by Trade Risk include ‘specified injury benefit‘ as standard.

With this option you will be paid for certain injuries without having to go through the full waiting period.

Instead the policy will pay you a certain number of monthly benefits depending on the type of injury sustained.

For example a broken arm may entitle you to one month’s benefits, whilst a broken leg may get you three month’s benefits.

The real beauty of this option is that you will receive the money straightaway regardless of your waiting period, and regardless of how long you are actually unable to work for.

Due to the manual nature of being a tradie, the specified injury benefit is a major bonus for many Trade Risk clients.

More Information

The waiting period and associated options on an income protection policy can have major ramifications for a tradesman when it comes to claim time.

To ensure you have the most appropriate cover in place the best option is to speak with a qualified financial adviser.

 

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