Benefit Period

The benefit period is a critical feature of Australian income protection insurance, defining how long you'll receive monthly benefits if you remain unable to work due to disability or illness. It represents the insurer's maximum payment obligation for any single continuous claim. Australian income protection policies offer benefit periods ranging from 1-2 years (short-term) to age 65 or 70 (long-term). The choice of benefit period dramatically affects both premium costs and coverage adequacy. A 2-year benefit period costs significantly less than coverage to age 65 but only protects against temporary disabilities. Coverage to age 65 provides comprehensive protection for permanent or long-term disabilities, effectively bridging the gap until Age Pension eligibility. Australian financial advisers typically recommend longer benefit periods (to age 65) for most clients, as the average duration of income protection claims that extend beyond 90 days is 2-3 years, and catastrophic disabilities can be permanent. However, for some professionals with valuable skills and high likelihood of rehabilitation, shorter benefit periods combined with TPD insurance may be appropriate. The benefit period begins after the waiting/elimination period expires and continues as long as you meet the policy's disability definition and don't exceed the maximum period. Some policies offer 'step-down' benefits where the monthly payment reduces after a certain period (e.g., 100% for 2 years, then 75% to age 65). Understanding your benefit period is essential for ensuring your insurance adequately protects your income-earning capacity throughout your working life.