How Does Covid-19 Impact Income Protection Insurance? Things You Must Know Now And For The Future


Currently the entire world is dealing with the impact of the COVID-19 pandemic. With the virus affecting many sectors within Australia, our economy and our personal finances have been hit hard.

Since the majority of people currently living have never experienced a pandemic, the impact it is making on our lives is massive and unprecedented. Situations like this tend to remind people of the uncertainty that life can bring and make you focus more on your future and how to protect yourself and your family from such uncertainty.

People are now beginning to think more about Income Protection and Life Insurance than ever before. Everyone now wants to think about what they can do for both themselves and their families, during a time of crisis.

Income protection insurance has been a hot topic during COVID-19, as there has been much confusion around what it can actually do for you. So, here is what you need to know about what is happening right now, in relation to income protection and what you need to know for the future.

Income protection policies provide a benefit of up to 85% of your income, when you are sick or injured and unable to work. What you need to know about right now is that while some have involuntary unemployment benefits, they are usually quite a small payout and some may only pay for specific items such as bills and income protection premiums for fixed number of term (e.g. 3 months).

One of the major causes of misunderstanding with income protection during the pandemic is that people think they will receive a large benefit during times of unemployment. It simply does not do this; the major benefit is only paid if you are sick or injured. If you have lost your job but stayed fit and healthy then you will most likely not be getting paid a benefit.

Also, most waiting periods on Income protection are usually a minimum of 14 days, but more often are actually 30, 60 or 90 days. In regard to COVID-19, the illness and recovery period seems to be around 14 days, so it is likely that you wouldn’t actually miss enough days of work to be able to claim from the virus.



While some policies have started excluding COVID-19 since around mid-March, others have chosen not to add any exclusion. However, you could argue that in this case a pandemic exclusion is largely irrelevant considering it is unlikely that you could claim anyway.

When looking towards and people now becoming more aware of the uncertainty life can bring, more people will look to income protection.

When looking at Income protection and even life insurance in the future remember to take some things into consideration. Every income protection policy will have its own definitions

of what needs to be meet, before you can make a claim. So, remember to always read the product disclosure statement of your insurer.

Another thing to think about is that when applying for some insurance in the future, insurers may require you to answer questions concerning your past activities during the pandemic time period, such as if you travelled before the restrictions or not.

Also, you will need to consider your workplace situation in the future. It is likely that more people than ever will shift to working at home more often, even after restrictions are lifted. This will in turn change the way workplaces must deal with their employees and we are yet to see how this will impact the insurance sector and if changes will come into place regarding working from home.

Lastly you will need to consider your mental health. There is likely to be a rise in mental health claims from the indirect impact of COVID-19 on people’s lives. So, a policy that does not exclude mental health may become more relevant in the future than a policy that doesn’t exclude COVID-19.

It is likely that as a society we will get better at managing our personal and business risks from all of this mayhem. It seems that in Australia, since we have the virus under control, the real calamity will not come from the virus directly, as such – but from all the effects it will stir up.

Mike Wallis

Mike has over 25 years experience, having spent his first seven years working as a Broker at Jardine Lloyd Thomson in Melbourne and in 2002 was transferred to JLT’s Accident and Health Department in London. For four years (2002 – 2005) Mike was a specialist A&H Lloyd’s Broker and during this time developed excellent relationships with the Lloyd’s A&H underwriting fraternity. In 2006 he returned to Australia in a senior broking position with overall responsibility for Placement Strategy, including the implementation of underwriting facilities and the various authorities granted by Lloyd’s. Mike was the underwriter at two specialist Underwriting Agencies prior to founding Aspect Underwriting in 2016.