Income protection and redundancy

Income protection insurance provides up to 75% of your salary should you become ill or injured and are unable to work. It is also generally tax deductible.

Generally speaking, the income protection policies available in the Australian market, including the policies we compare, do not cover redundancy or involuntary unemployment.

However select insurance companies have certain income protection insurance policies available which offer a benefit which may cover your mortgage for a certain period of you are made redundant.

  1. Commonwealth Bank Redundancy
  2. OnePath Unemployment Benefit
  3. Be wary of income protection which includes redundancy!
  4. What does Income Protection cover?
  5. Protect your lifestyle & loved ones with income protection

Commonwealth Bank Redundancy Insurance

CommInsure, the Commonwealth Bank’s (CBA) insurance division, offers an unemployment benefit as part of their income protection cover. CBA’s income protection redundancy benefit pays 1/30th of your monthly benefit for each day of unemployment if:

  • You were made involuntarily unemployed
  • You have a loan with the Commonwealth Bank
  • You were employed for at least 180 consecutive days prior to unemployment
  • You remain unemployed for at least 60 consecutive days

The benefit will cease being paid when:

  • You no longer have a loan
  • When you become employed again
  • When the benefit has been paid for 3 months.
  • If you receive a TPD, terminal illness, trauma or other benefit under an income protection policy or any other insurance policy
  • The policy ends
  • The cover expiry date is reached
  • If you pass away

OnePath Unemployment Benefit

OnePath, the insurance, investment and superannuation division of the ANZ Bank, offers an Unemployment Benefit as part of its OneCare policy.

The Unemployment Benefit pays your minimum loan repayments on home, investment, business, personal or margin lending loans from the ANZ Bank. It pays a maximum of $5,000 per month for a maximum of three months.

Criteria:

  • Loan must be with ANZ
  • You must become involuntarily unemployed
  • You must remain unemployed for at least 30 days
  • You must be registered with an employment agency and be seeking work
  • You must have been employed for at least six consecutive months prior to unemployment

You can only make one claim under this benefit every 12 months and a maximum of three claims over the life of the policy.

Be wary of income protection which includes redundancy!

If there is any type of insurance which offers to fully protect you against unemployment or redundancy, it is often too good to be true and they generally often come with a number of criteria:

  • Only available if you aged 18 – 60
  • Only available if you are working at least 20 hours per week
  • Your policy must be in force for at least 6 months before you can claim
  • You must be out of work for at least 28 days
  • You must have been employed for at least 6 consecutive months

If your unemployment is a result of sickness or injury, poor job performance, the loss of qualifications or license, seasonal employment, voluntary redundancy, contract ending, the completion of a task or project then the benefit will not be paid. Also if you are working less than 20 hours per week you will not be covered.

What does Income Protection cover?

Income protection covers up to 75% of your income if you are unable to work due to a sickness or accident. It allows you to recover without having to worry about your salary and receive an income to help with paying your day to day living expenses, mortgage or rental payments and other costs.

Protect your lifestyle & loved ones with income protection

Contact xLife to discuss your income protection needs or to receive free income protection quotes. If you need money to cover your expenses during extended leave from work due to sickness or injury, you can bridge the gap with Income Protection Insurance, rather than redundancy insurance or unemployment insurance. The funds from income protection cover can help pay for bills and living expenses.