Income Protection Insurance FAQs

Taking sick leave or a few days off is fine for your common cold or sprained ankle, but have you wondered how you would you manage if something more serious stopped you working? How do you keep paying rent? How do you feed the family? If it’s an ongoing sickness or injury it doesn’t take long to go through any savings you have managed to squirrel away.

Income Protection Insurance provides you with an income if you can’t work due to a serious sickness  or injury. The benefits are paid as a regular monthly income for a specified period, helping you to support yourself, your family and covering essential living expenses while you are not working.

Starting from $1,500 per month, NobleOak’s Disability Income Insurance will cover you for up to 70% of your regular, pre-tax income to a maximum of $30,000 per month (subject to certain limits). Within these guidelines, you can choose the Monthly Benefit to suit your needs and budget, as your premiums will be calculated on the amount of the cover.

Next you need to choose your waiting period, which at NobleOak is either 30 days or 90 days. This is the period before you become eligible to receive a Monthly Benefit. If you choose a 90 day Waiting Period, your premiums will be lower, because you are effectively self-insuring for those first 90 days of disability.

You then choose the Benefit Period, which is the maximum length of time you will receive a monthly payment while unable to work due to Sickness or Injury. At NobleOak you have the choice of a 2-year or 5-year Benefit Period, or a Benefit Period until you are 65.

Income Protection Insurance pays a monthly benefit of up to 70% of your regular pre-tax income if you can’t work due to a serious illness or injury.
Having this type of cover in place can help ensure your family will not be left with a major financial burden if you’re left without an income. For example, your monthly benefit payments may be used to ensure:

• you can keep up with your rent or mortgage payments
• you can cover your ongoing bills and everyday expenses
• you don’t need to rely on family or friends for financial support.

How Income Protection Insurance can help

Robert, aged 29, is a qualified chef. He is married to Catherine and they have three children. Catherine also works, and their family is reliant on both Robert and Catherine’s incomes.

Robert was diagnosed with Non-Hodgkin’s Lymphoma in July 2015. Unfortunately, he needed to undergo several rounds of chemotherapy, meaning he was off work for several months.

When Robert married Catherine seven years earlier, he attained Income Protection Insurance on the advice of his father.
After his diagnosis, Robert made a successful claim on his policy and started receiving monthly benefit payments after the conclusion of the 30-day waiting period.

After five months Robert returned to work on a part-time basis, and his cover continued to provide ongoing partial monthly benefit payments to assist while he returned to full work duties three months later.

Income Protection Insurance enabled Robert and Catherine to meet their monthly mortgage payments, and also covered the costs of the essential school and household expenses.

Benefits of NobleOak’s Disability Income Insurance

 High cover levels

You can apply for up to $30,000 per month, without having to go through a financial adviser. That’s much higher than most direct insurers.

Low premiums

We are committed to providing value for money, and we carefully manage our costs to keep our premiums as low as possible.

Fully underwritten cover

We take the time to get to know you upfront, so we can tailor your cover and premium. That gives you more certainty at claim time.

Please note that the information we provide is not advice but general information only.

NobleOak’s Disability Income Insurance pays a monthly benefit of up to 70% of your Regular Income (before tax) if you can’t work due to a Sickness or injury (subject to certain limits). While premiums for Income Protection Insurance are generally tax-deductible, you need to make sure you understand the tax implications, and you may need to seek tax advice.

When you can claim a tax deduction

According to the Australian Taxation Office (ATO), Income Protection Insurance premiums are generally tax-deductible. The position can vary where cover is purchased as part of superannuation arrangements (for example, through an SMSF, or through an industry or retail super fund).

For all queries about taxation specific to your situation, we recommend you seek advice from an accountant or suitably qualified professional.

What you need to declare

As these benefits replace regular income, the ATO stipulates that any payments received under an Income Protection Insurance policy must be included on your tax return as part of your assessable income.

Please note that the information we provide is not advice but general information only.

With NobleOak’s Disability Income Insurance you can choose cover of up to 70% of your regular pre-tax income, up to a maximum of $30,000 per month.

A baseline some people use is to have enough cover to manage living costs if they were unable to work. Do you have debts such as a mortgage or a car loan? Do you have dependents? Can you supplement with savings and manage on 50% or 60% of your income, or should you opt for the 70% maximum cover? These are the types of questions you should consider when deciding on the right level of cover for you.

For example, Roger is a 32-year-old nurse with an annual salary of $80,000 and has just bought his first home. Now that he is responsible for a mortgage, he decides it’s time to protect himself in case of serious illness or injury. His current income enables him to take out Disability Income Insurance to a maximum benefit value of $4,667 per month.

Roger has no dependents and no other debt besides his mortgage. He calculates that he could manage his mortgage and living expenses on less than 70% of his salary, particularly if he was sick or injured, as he would also be saving money on his usual sporting and social activities. He could also rent out the second bedroom in his house if necessary. Roger decides to take out cover for a benefit of $4,000 month with a 90-day Waiting Period, knowing that if his circumstances change in the future and he gets a pay-rise or acquires more financial responsibilities/dependents, he will be able to apply to increase his cover to suit his needs.

At NobleOak, you can also insure your guaranteed superannuation contributions, up to 10% of your sum insured, to ensure you can still save for your retirement, even while on claim. This extra 10% will be paid directly to a complying superannuation fund on your behalf.

Most occupations can be covered by NobleOak’s Disability Income Insurance, however if your occupation is considered hazardous, the level of risk will be assessed and, in some situations, this may affect your eligibility or the level of your premiums.

For example, Stella works as a nurse and applied for Disability Income Insurance. Because her occupation falls into a higher-risk category, her premiums will be higher than her friend Jenny who is an accountant.

However, Jenny’s cousin Harry is an acrobat in a travelling circus and, due to the risks involved on the flying trapeze, he would not be eligible for Disability Income Insurance.

Yes! Income Protection Insurance is certainly available to you if you’re self-employed (subject to our standard underwriting assessment). In fact, it is ideal for anyone who is self-employed and doesn’t receive any employer-paid sick leave or other employee entitlements.

NobleOak’s Disability Income Insurance offers cover of up to 70% of your regular income to help support you and your family and cover essential living expenses if you are unable to work due to Sickness or Injury. If you are self-employed, that translates to a soft place to fall.

In addition, if you also run your own business, NobleOak offers a valuable add-on our Disability Income Insurance: Business Expenses Insurance, which helps cover the fixed running costs of your business.

One of the features of NobleOak’s Disability Income Insurance is that we will waive your premiums while you are receiving monthly benefits.

For example, if after the selected waiting period, you are unable to work for six months and are receiving your monthly benefits, you will not be required to pay premiums during that period.

Your premiums will resume once you return to work, or at the end of your Benefit Period, whichever occurs first.

Most people have some sick leave available, savings or some other type of support that can help them manage through the initial period of sickness or injury. With NobleOak Disability Income Insurance you can choose a Waiting Period of either 30 days or 90 days before you are eligible to receive benefits. Choosing the longer Waiting Period reduces your premiums.

For example, Daphne’s a fit and healthy 30-year-old primary school teacher who rarely gets sick and accrues unused paid sick leave. She also has regular term holidays and an emergency savings account that gives her peace of mind if something unforeseen comes up. To keep her Disability Income premiums to a minimum, Daphne has chosen the longer waiting period of 90 days, confident that she will only need benefits to be paid if she is disabled for more than 3 months.

Indemnity value means that even though you selected an amount to be insured for when you applied (often based on your income), if at the time you make a claim you have been earning less, your benefit will be adjusted accordingly. That is to say, you will be paid whichever is lower: the benefit amount, or 70% of the actual pre-disability income (subject to certain limits).

For example, Trudy takes out NobleOak’s Disability Income Insurance when she is earning $180,000 a year in the advertising industry, or $15,000/month. In her application, even though she could get cover for over $10,500 per month, she decides a Monthly Benefit of $8,000 per month is sufficient to cover her if she couldn’t work.

Several years later, there has been an economic downturn and Trudy is working in a smaller agency for a lower income of $120,000 when she suffers a serious injury and has to stop work. She makes a claim on her NobleOak Disability Income Insurance. Because Trudy’s income now translates to a maximum Monthly Benefit of $7,000 (70% x $120,000/12), this slightly lower amount is what she will receive, compared to her insured Monthly Benefit of $8,000. It’s a good idea to review your cover regularly to ensure it still suits your needs.

There are two main categories of disability within Income Protection Insurance: Total and Partial Disability.
If you become Totally Disabled due to sickness or injury, that means:

• that you are unable to perform one or more duties of your occupation important or essential to producing income, and
• that you are not working, whether paid or unpaid, and
• that you are following the advice of a medical practitioner.

If you become Partially Disabled, due to sickness or injury, that means:

• you are only capable of performing some duties of your occupation
• your monthly income is less than your pre-disablement income, and
• you are following the advice of a medical practitioner.

Most of us – bar a lucky few – rely on our regular income to get by. Some live week-to-week, with pay consumed by daily living expenses; others manage to put some of the pay packet towards savings. No matter which camp you fall into, the prospect of suddenly losing your income is pretty grim.

Could you afford to maintain your current lifestyle if your salary was switched off tomorrow? How would you cope with mortgage repayments, school fees, bills, and general living costs? These are the questions that people might face if they suddenly suffer a serious injury or are struck down with a serious illness. Unable to work, and with only a few weeks’ sick leave, their income may dry up quickly.

It’s one of the main reasons why many people take out Total and Permanent Disability (TPD) Insurance or Income Protection Insurance. Question is, which one is right for you? Or, indeed, do you need both?

How you purchase the cover

TPD Insurance is purchased as part of an optional extra to Life Cover. This is often referred to as a ‘rider’ product, in that, you cannot have TPD Insurance without Life Cover in place. As TPD Insurance is a portion of your Life Cover, it cannot be higher than your Life Cover.
Income Protection Insurance, on the other hand, is purchased as a stand-alone cover that sits separate to any Life Cover that you might have.

How claims are paid

TPD Insurance pays a once-only lump sum if you are never able to return to work again. On paying out this lump sum, your Life Cover is reduced by the amount of the claim. It’s designed to help you adjust to living with a total and permanent disability. You can choose to be covered for situations where you are totally and permanently disabled from your own occupation, or from any occupation.

NobleOak Disability Income Insurance, on the other hand, pays you a monthly income of up to 70% of your regular income if you are unable to work due to an Sickness or injury, even if the disability is temporary and even if you are not Totally Disabled (subject to claims criteria). You can choose a Benefit Period of 2 years, 5 years, or to age 65 – this determines the maximum length of time a claim could be paid for.

How you could use your benefit

So, TPD and Income Protection Insurance are very different. Given the difference between how claims are paid, a lump sum versus a monthly benefit, it may be a consideration to take out both types of cover.

For example, if you became permanently disabled and couldn’t work again, you might use the TPD benefit (a lump sum) to pay off the mortgage and other large debts, while an Income Protection benefit (an ongoing monthly payment) could be used for regular living and therapy costs. In either scenario, the benefit payments would provide greater peace of mind that your expenses could be covered.

When you take out Income Protection Insurance with NobleOak you may be entitled to the following types of Product Features and Benefits:

• Partial Disability Benefit
• Rehabilitation and Retraining Support

Partial Disability Benefit

NobleOak Disability Income Insurance may also pay a reduced benefit if you are partially disabled due to your Sickness or Injury, and you return to work but in a reduced capacity.

You are eligible for this benefit if, due to your Sickness or Injury, you are unable to work more than 32 hours per week, your monthly income is less than 80% of your Pre-Disability income, and you are following medical advice including the agreed rehabilitation plan.

The Partial Disability Benefit becomes payable if you have been Totally Disabled for at least 14 days and remain Totally or Partially Disabled beyond the expiry of the Waiting Period.

For example, Danny breaks his back in a surfing accident. After the Waiting Period, Danny continues to have treatment and rehabilitation, during which time he receives a full Disability Income benefit. After 10 months, Danny’s doctor gives him the all-clear to return to work. But Danny is no longer able to work more than 25 hours per week due to his injury. He returns to work in a reduced capacity and his income is about 65% of what he was earning before his accident. Danny is therefore eligible for a Partial Disability Benefit to help cover the shortfall in his earning capacity.

Rehabilitation and Retraining Support

If you are receiving claim payments from NobleOak, we may approve certain additional expenses to help you return to work. If your healthcare provider recommends a rehabilitation or retraining plan, and NobleOak pre-approves the costs, we will reimburse you for these expenses to help you get back on your feet.