FAQs – Income Protection

Income Protection FAQs

Common questions around Income Protection.
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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 illness or disability, 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 illness 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 $1,000 per month, NobleOak Income Protection Insurance will cover you for up to 75% of your before-tax income to a maximum of $25,000 per month. 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 your monthly benefit. If you choose 90 days, your premiums will be lower, because you are effectively self-insuring yourself with your own savings for those first 90 days of disability.

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

Income Protection Insurance pays a monthly benefit of up to 75% of your regular before-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 repayments
  • 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 commenced Income Protection Insurance on the advice of his father.
After his diagnosis, Robert made a successful claim on his Income Protection Insurance 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 until he returned to full work duties three months later.

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

Benefits of NobleOak’s Income Protection Insurance

High cover levels

You can apply for up to $25,000 per month cover, without having to go through a financial adviser. That’s much higher than most direct insurers.

Low premiums

We don’t pay fees or commissions to advisers, or spend money on big ad campaigns. That means lower premiums for you.

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.

Income Protection Insurance pays a monthly benefit of up to 75% of your regular before-tax income if you can’t work due to a serious illness or injury.
While premiums for Income Protection Insurance are generally tax-deductible, you need to make sure you understand the tax implications of how you buy your cover.

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 Income Protection Cover you can choose cover of up to 75% of your before-tax income, up to a maximum of $25,000/month.

You will need to have enough cover to manage your living costs if you 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 75% maximum cover?

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 Income Protection Insurance to a maximum benefit value of $5,000/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 75% 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 $4000/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 increase your monthly benefit by a further 10% of your income to allow for superannuation contributions that you or your employer would have paid had you continued working. This extra 10% should then be paid into a complying superannuation fund.

Most occupations can be covered by NobleOak Income Protection 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 Income Protection. Because her occupation falls into a high-risk category, her premiums will be higher than her friend Jim who is an accountant.

However, Jim’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 Income Protection.

Yes! Income Protection Insurance is certainly available to you if you’re self-employed. 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 offers you Income Protection Insurance cover of up to 75% of your 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 to Income Protection: Business Expenses Insurance, which helps cover the fixed running costs of your business.

One of the features of NobleOak Income Protection 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 and/or savings that can help them manage through the initial period of illness or injury. At NobleOak, 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 can reduce 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 Income Protection 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 are insured for an amount based on your income at the time of application, 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 75% of the actual pre-disability income.

For example, Trudy takes out NobleOak Income Protection 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 $11,250/month, she decides a monthly benefit of $8,000/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 Income Protection Insurance. Because Trudy’s income now translates to a maximum benefit of $7,500 (75% x $120,000/12), this slightly lower amount is what she will receive, compared to her insured monthly benefit of $8,000.

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.

Indemnity value means that even though you are insured for an amount based on your income at the time of application, 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 75% of the actual pre-disability income.

For example, Trudy takes out NobleOak Income Protection 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 $11,250/month, she decides a monthly benefit of $8,000/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 Income Protection Insurance. Because Trudy’s income now translates to a maximum benefit of $7,500 (75% x $120,000/12), this slightly lower amount is what she will receive, compared to her insured monthly benefit of $8,000.

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 salary 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 salary 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 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 same amount. It’s designed to help you adjust to living with a total and permanent disability. You can choose to be covered only for whether you able to return to work in your own occupation or for any occupation.

Income Protection, on the other hand, pays you a monthly income of up to 75% of your regular income if you suffer a specific illness or injury, regardless of whether you are totally disabled or whether or not you can return to work. You can choose a benefit period of 2 years, or to age 65 – this determines how long you could be paid benefits for.

How you could use your benefit

Given the difference between how claims are paid in TPD and Income Protection Insurance, 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 daily living and therapy costs. In either scenario, the benefit payments would provide greater peace of mind that your expenses could be covered.

With Indemnity Value Income Protection, your benefit is calculated at the time of your claim. This will either be the benefit amount you are insured for, or 75% of your actual pre-disability income, whichever is lower.

Agreed Value Income Protection means that you have verified your income at the time of application and the insurer has agreed to cover you for a fixed benefit based on that income, regardless of any subsequent change in income.

NobleOak Income Protection operates on the more popular Indemnity Value model which is more cost effective than Agreed Value and results in lower premiums for you, the customer.

Agreed Value Insurance gives more certainty around the amount of benefit paid, which may be comforting if you are self-employed, or if your income is inclined to fluctuate, but it is less common and incurs higher premiums.

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

  • Spousal Benefit
  • Nursing Care Benefit
  • Partial Disablement Benefit
  • Recurring Disablement Benefit
  • Rehabilitation Expenses Benefit

Spouse Benefit

If your spouse needs to stop working because of your total disability, NobleOak will pay an additional amount up to $2000 (depending on your spouse’s income) per month for up to 6 months. The benefit is paid in arrears, and payment commences 90 days after you have been receiving the income protection insurance benefit.

Nursing Care Benefit

If you become totally disabled and confined to bed, and a doctor certifies that you need full-time care from a registered nurse for more than three consecutive days during the Waiting Period, you will be eligible for the Nursing Care Benefit.

NobleOak will pay a daily proportion, monthly in arrears, of your Total Disablement Benefit towards your nursing care costs while the care continues, up to the end of the waiting period, for each day after the first 3 consecutive days.

The nursing care must be provided by a registered nurse and not a friend, relative or employee.

For example, Bill suffers a major stroke and is hospitalized for 12 days. His NobleOak Income Protection means that he is entitled to a Nursing Care Benefit after his first three days in hospital. His Nursing Care Benefit will therefore be 9 days’ worth of his monthly benefit. If Bill’s monthly income protection insurance benefit is $4,500, his Nursing Care Benefit will be $1,350.

Assuming Bill is still totally disabled, his full monthly benefit will commence monthly in arrears after the end of his waiting period.

Partial Disablement Benefit

NobleOak Income Protection 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 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.

The Partial Disablement 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 and becomes paraplegic. After the waiting period, Danny continues to have treatment and rehabilitation, during which time he receives full Income Protection benefits. After 10 months, Danny’s doctor gives him the all-clear to return to work. But Danny is no longer able to perform all the duties of his occupation as a car mechanic from his wheelchair. He returns to work in a reduced capacity and for less income than he was earning before his accident. Danny is therefore eligible for a Partial Disablement Benefit to help cover the shortfall in his earning capacity.

Recurring Disablement Benefit

If you return to work for less than 6 months after receiving your most recent total disablement or partial disablement benefit, and suffer a recurrence of your total or partial disability from the same or related cause, the claim will be treated as a continuation of the original claim and no waiting period will apply.

For example, Daryl slipped a disc at work and was off for 12 weeks. After his 30-day waiting period, he received his monthly benefits from NobleOak. Having recovered, Daryl returned to work and resumed his duties as normal.
Unfortunately, after 5 weeks back on the job, his disc slipped again and he was unable to continue working. He was off for another 2 months and received his monthly benefits for both those months without having any waiting period.

Rehabilitation Expenses Benefit

If you are receiving claim payments from NobleOak, we may approve certain additional expenses (recommended by your doctor) being reimbursed to help you to return to gainful employment. These may include:

  • Rehabilitation – For any Total Disability claim, Partial Disability claim or claim under Specific Sickness or Injuries, we will pay up to an additional 50% of your monthly benefit for up to 12 months for your participation in a rehabilitation program.
  • Special equipment – For any Total Disability claim, we will reimburse up to 12 times the amount of your monthly benefit for costs incurred for special equipment to help you re-enter the workforce.
  • Workplace modifications – For any Total Disability claim, we will reimburse up to 3 times the amount of your monthly benefit for costs incurred for modifications to your work place.

If you become totally disabled and confined to bed during the waiting period, and a doctor certifies that you need full-time care from a registered nurse for more than three consecutive days, you will be eligible for the Nursing Care Benefit.

NobleOak will pay a daily proportion of your Total Disablement Benefit towards your nursing care costs while the care continues, up to the end of the waiting period.

The nursing care must be provided by a registered nurse and not a friend, relative or employee.

For example, Bill suffers a major stroke and is hospitalized for 12 days. His NobleOak Income Protection means that he is entitled to a Nursing Care Benefit after his first three days in hospital. His Nursing Care Benefit will therefore be 9 days’ worth of his monthly benefit. As Bill’s monthly benefit will be $4,500, his Nursing Care Benefit will be $1,350.

Assuming Bill is still totally disabled, his full monthly benefit will commence monthly in arrears after the end of his waiting period.

Why choose NobleOak Life Insurance?

While we are very proud of the cover we provide, a simple belief in 'doing the right thing' sets us apart.

Low premiums

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so you don't pay for the cost of advice
or for unnecessary overheads.

Fully underwritten insurance

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Insurance, tailored by you. This minimises
the risk of unforeseen delays or surprises
in the event of a claim.

Simple & straightforward

We aim to avoid overly complex terms.
We simply provide great value,
comprehensive Life Insurance.

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