Fail safe: What income protection does not cover

Last updated on June 26th, 2025

While insurance provides some comfort should you be injured or too sick to work, it is important you understand what income protection does not cover as much as what it does.

Illness and injury are just two reasons you might not be able to work but they are generally the only circumstances in which an insurer will cover lost income. Even then, there are some exemptions and reasons why you may not receive any benefits.

What are the terms of income protection?

If you want to mitigate the costs of not being able to work, income protection insurance can be worthwhile, particularly if you don’t have any savings or are the main income earner. As a rule, you should be covered for up to 90 percent of your income for the first six months and then up to 70 percent of your income for a certain time after that.

How you became sick or were injured, however, will determine whether you are entitled to make a claim. When you’re comparing insurers and policies, read the policy exclusions carefully. They generally include:

• • Intentionally harming yourself, such as attempting suicide
  • Injuries that happened while engaged in criminal activity
  • Pregnancy, elective surgery or elective treatment
  • A pre-existing illness or injury that has not been disclosed to the insurer
  • A pre-existing illness or injury the insurer has refused to include in your policy

It is very important that you are honest with the insurer about your medical history when taking out your policy. Lack of disclosure is a common reason for claims being rejected, though it is far from the only reason people complain about income protection insurance.

 

 

While you might want to protect yourself for all eventualities, income protection does not provide a safety net for every circumstance. You will not be covered if:·

• • You are made redundant
  • You are sacked or your contract is not renewed
  • The business closes and you lose your job

Can I claim income protection from my super?

If you have superannuation, you may already have some income protection, as well as total or permanent disability (TPD). Many funds offer default TPD cover, as well as life insurance, but it may not be enough to meet your needs should you fall ill or get injured. By paying a little extra each week, you might be able to lift your cover substantially, depending on your personal circumstances.

While it may be cheaper to increase your cover through superannuation, however, it may not provide the same benefits as taking out a separate income protection insurance policy. You can’t claim insurance protection payments made through your super as your tax deductions, either. Do the research and weigh up the costs and benefits before committing.

 

 

What if I’m not working?

If you pay income protection but at the time you are hurt or fall ill you are not working, can you still claim income protection?

It depends on the circumstances. Your monthly benefits are usually calculated on the previous 12 months of employment, so if you worked over that period the amount would be used as the basis for your claim.

If you are not working because of an injury or illness that is covered by worker’s compensation, you may not be eligible for income protection benefits at the same time. Check with your insurer.

 

 

Australians who are self-employed or work part-time can also get income protection insurance, but they will need to meet the insurer’s minimum number of hours each week (generally between 15 to 30 hours) to qualify for benefits.

Always do your research. If you thought your policy covered your circumstances and your insurer is not meeting their obligations, make a complaint with us and we’ll help you handle it.