Does Income Protection Cover Me for a COVID Redundancy?
August 10, 2020 (Investorideas.com Newswire) No one anticipated that 2020 would be marked by the arrival of a worldwide pandemic. As COVID-19 has spread around the world, millions of people have found themselves out of work and facing financial insecurity. While cities and countries are beginning to re-open and adapt to the new normal, many people are facing work uncertainty and fear that a recession could bring even more financial burdens. Staying afloat during COVID-19 and keeping a job hasn't been easy, and unfortunately, many households have lost their primary income. Those with income protection may find themselves covered for COVID redundancy.
What is Income Protection?
Income protection insurance is a kind of financial security in the event that sickness, long-term illness, injury, or accident cause you to become unable to work. Income protection provides you with a monthly benefit of up to 75% of your income until you can return to work. Think of income protection as a cross between disability insurance and life insurance. Knowing that you have some form of disability benefits following an accident-related surgery helps with the stress of meeting your financial obligations.
At iSelect.com.au you can easily compare income protection quotes from leading providers such as Zurich to find the right income protection gap coverage for you. When considering an income protection insurer, you will want to consider the waiting period, the benefit period, whether it is an agreed value or indemnity, and super or non-super. Waiting periods can impact your premiums and the time you must wait to make a claim.
Eligibility for income protection insurance depends on your own occupation, age, income, and health. Comparing income protection insurance with iSelect is a good idea to give yourself the peace of mind in case you are unable to work.
Does income protection cover Coronavirus?
Income protection does cover Coronavirus. Epidemics or pandemics are not excluded in income protection policies, so you can make a claim on your income protection insurance if COVID-19 has interrupted your income. It's not too late to take out an income protection policy, however, many insurers are no longer offering the redundancy add-on option. You will still be covered if you contract COVID-19 shortly after you take out a policy, but you might not be covered if you lose your job.
How does income protection help if you get sick?
If you contract COVID-19 and are unable to work due to sickness, income protection insurance should allow you to make a claim. When you can make a claim depends on your income protection policy's waiting period for illness. Typically there is no money paid during the waiting period or the set length of time between when your work stops and when you can make a claim. Some income protection insurance providers let the insured customize waiting periods. The longer the waiting period, the lower the premiums and vice versa. The average waiting period is between 14 and 30 days. Do note that you won't receive backdated payments during the waiting period.
Does income protection cover redundancy?
Assuming your income protection policy includes redundancy coverage, your insurance should cover redundancy due to COVID-19. There are strict limitations to redundancy coverage. Typically, you need to wait out a six-month no-claim period before you can receive benefits. Your cover will be voided if your employer indicates that redundancy may happen during this six-month no-claim period. There's a 28-day waiting period from the time you lose your job to when you can make a claim. The claim will last a maximum of three months.
If you take out an income protection policy today, so long as you are employed for at least six months without warning that redundancy is possible by your employer, your policy has value. If redundancy happens after you have been employed six months or longer, you only have to wait 28 days before making a claim for redundancy benefits.
Claiming income protection benefits for redundancy will impact your eligibility for welfare payments.
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