Accidental Injury Income Protection
Accidental Injury Income Protection is a type of personal accident insurance that covers up to 75% of income in the event of an accident that stops a person working. Like Accidental Life Insurance, Accidental Injury Income Protection provides coverage for accidents only and does not cover sickness related events.
Accidental Injury Income Protection is usually used where a person is ineligible for a full income protection policy due to medical history or where a lower cost income protection policy is needed to protect against unforeseen accidents. Accidental Injury Income Protection policies work the same as a typical income protection policy with a limitation on what events can be claimed for. A major feature of Accidental Injury Income Protection is limited underwriting. Generally medical history is not required when applying and policies can be issued quickly. In addition, smokers and non-smokers generally pay the same premium!
What is covered under an Accidental Injury Income Protection policy?
Coverage is limited to accidents only. For example, a car accident or a fall that occurs after the policy is taken out. When looking at Accidental Injury Income Protection policies you need to keep in mind that normally, an injury that you have had before, isn’t covered again unless it is unrelated. So injuries that reoccur are not covered under Accident Only Income Protection. Again an example of what would not be covered is an old knee injury that reoccurs due to wear and tear. Coverage is provided 24 / 7 and injuries that occur at home or work can be claimed on. An example of the definition of ‘injury’ under an Accidental Injury Income Protection policy;
‘An injury is a bodily injury occurring while this policy is in force and which is caused solely and directly by violent, accidental, external and visible means, independent of any other cause.’
How does an Accidental Injury Income Protection policy work?
Accident Only Income Protection works very similar to a full income protection policy. When considering a policy, there are variables that can be applied to a policy to meet differing needs. The main two variables include;
- Waiting Period – the time that a person is unable to work before benefits can accumulate and then be paid. Typical Accident Only Income Protection waiting periods options include 3 days, 14 days, 30 days, 60 days and 90 days. The longer the waiting period, the lower the premium. However payments are not made during the waiting period so for longer waiting periods; the injury would need to be more severe to be eligible for payments.
- Benefit Period – this is the maximum time that a claim will be paid for each injury. 2 year benefit period, 5 year and ‘until age 65’ are the main benefit period options available. If a person is able to return to work earlier a claim will cease, however the benefit period basically ‘caps’ the claim amount. The longer the benefit period, the higher the premium.
What does an Accidental Income Protection policy cost?
Accidental Income Protection policies are priced lower than full Income Protection policies as only accidents are covered. Typical premiums for a blue collar worker with a 30 day wait and a 2 year benefit period insuring $4,000 per month1 are;
- 30 year old – $52 per month
- 40 year old – $61 per month
- 50 year old – $95 per month
Accident Only Income Protection premiums are generally tax deductible; meaning that by purchasing a policy the premiums can reduce taxable income and thus the amount of tax that is paid.
How do I obtain an Accidental Injury Income Protection policy?
Accidental Injury Income Protection can be obtained from some insurers directly and via Life Insurance Brokers or Financial Advisers. Our preference is via Financial Advisers. Not only do they generally have access to more than one insurer, allowing them to find a policy that suits you, they are professionals and experts in Income Protection. They can advise you on which policy suits, how policy wordings will affect you and most importantly, if the adviser is worth their salt, they will help your family make a claim. Compare this to obtaining insurance from an insurer directly and you and your family will have to rely that the information that the person gives you is right and relevant for your situation! Want personalised Accidental Income Protection advice and comparisons? Enquiry with our advice partner below.
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1Quotes based on a plumber, stepped premiums in NSW, 30 day wait, 2 year benefit period, indemnity policy. Smoking status no impact.
About the Author – Benjamin Irons
Benjamin has been involved in the financial services industry since 2004. Benjamin has a Bachelor in Business, Diploma of Financial Services (Financial Planning). Previously a Financial Adviser and a business owner, Benjamin has worked with hundreds of individuals and businesses to implement simple strategies to improve wealth. Leaving his role as a Financial Adviser, Benjamin writes for a number of websites to assist people take control of their finances and find their financial freedom!