What Income Protection Does Not Cover

If you cannot go to work because of partial or total disability, income protection insurance pays you a monthly amount of up to 85% of your normal income. However, just the way there are two sides of the same coin, similarly, there are two sides of income protection insurance. 

It is, therefore, important to know the other side of income protection insurance before you take one. 

What Income Protection Does Not Cover

1. Employment Termination 

• If your employer terminates your contract employment, income protection will not cover you. This is because income protection insurance only assists employees if they cannot perform their normal work duties because of an injury or illness.
• In addition, if you decide to quit your job or terminate your contract employment, income protection will not cover you.

2. Redundancy 

If the requirement of your work diminishes or ceases, your employer can declare your job redundantly. If your job no longer exists, you cannot go back to work.  Therefore, if you are made redundant, income protection insurance will not pay you a regular income. 

3. Termination of Business 

If your employer decides to close their business, move the business to a new place, or close the business to begin a new venture, you can lose your job. If you lose your job due to termination of business, income protection insurance will not cover you. 

4. Injured Outside of Work 

• If you are injured outside of work, your income protection policy may not cover you. Therefore, you must read the fine print before taking income protection insurance.
• If you are disabled or injured during certain activities, you should know if you are covered before you take the policy. For example, if you injure yourself on purpose or you get injured during riots, war or even terrorism, you may not be covered. Additionally, if you use alcohol or drugs or get involved in illegal activities, income protection may not cover you.

Also read: Understanding Income Protection Insurance

Do you have questions that weren’t answered? Contact us for a free consultation 

Income protection insurance will pay you a regular income in case you become ill or get injured. However, it is difficult for most people to decide if they need income protection insurance. If you want to know if you need income insurance, you must talk to a financial advisor. 

If you have questions that were not answered, do not hesitate to contact Absolute Insurance for a free consultation. Or if you want to get an income protection insurance cover in Perth, Western Australia, contact Absolute Insurance today.

Reviewed by Greg Maguire

Greg Maguire reviewed this article to make sure the information is accurate and reflects current insurance practice. It is general advice only and does not take your personal circumstances into account.

Greg Maguire is an Authorised Representative (No. 255354) of AD Advisory Services Pty Ltd, ABN 68 005 830 802, AFSL 237058.

Greg Maguire

Principal

Greg Maguire is the founder and principal of Absolute Insurance, a family-run Perth life insurance broker he runs with his wife Steph. Greg has spent more than 20 years helping Western Australian families and business owners protect what matters most, with life insurance, income protection, TPD and trauma cover from Australia's leading insurers.

Before insurance, Greg was a primary school teacher, and that same patient, one-to-one approach is how he still works today. He takes the time to understand your situation, explains your options in plain English, and stands beside you and your family if you ever need to claim.

Greg holds an Advanced Diploma of Financial Planning from Deakin University and a bachelor's degree from Edith Cowan University. He is an active member of the local community through the Chamber of Commerce and Industry WA and Baldivis Rotary.

Greg Maguire is an Authorised Representative (No. 255354) of AD Advisory Services Pty Ltd, ABN 68 005 830 802, AFSL 237058.