What You Need To Know About The Job Keeper Payments, In Regards To Income Protection
Navigating the personal financial implications that have fallen out of the various State and Commonwealth government stimulus responses looks like being quite a minefield for most Australians this year. Whether it’s working out what you are eligible for or pulling your tax return together, there are a lot of unknowns and areas requiring considerable clarification. And it’s not even particularly clear that the regulators and decision-makers know what the answers are.
One of the routine questions that comes up is whether or not you are eligible for income protection insurance payments if your employer is paying JobKeeper, and whether those payments are over and above the JobKeeper payments.
The simplest answer is that if you are eligible for and receiving JobKeeper you are still likely to be eligible for income protection insurance payments. However, like any other income support payment such as NewStart, JobSeeker or a Disability Support Pension, the amount you receive in government support will be assessed as part of your income and your insurance payments adjusted accordingly.
Changes to JobKeeper Payment payment rates and eligibility mean some people may now be eligible for both JobKeeper Payment and JobSeeker Payment.
— Services Australia (@ServicesGovAU) September 30, 2020
More info: https://t.co/16tXdhPmVr pic.twitter.com/J0vMpjz7uC
Typically, when an income insurance product is due to be paid, the payment amount is determined by averaging the income you have received over the previous 12 months and then adjusted according to the percentage of income defined in your policy.
Therefore, if you are eligible for receiving the JobKeeper payment while you are sick or injured and unable to work, then it is likely that a benefit will be paid by the insurer which will bridge the gap between Job Keeper and your average income over the previous 12 months. However, if your JobKeeper payment is the same or more than your average income over the previous 12 months then you will not receive an insurance payment. The reason being that you have not suffered a loss of income.
An important consideration is that, while this approach is consistent with the treatment of other government income support payments, the JobKeeper stimulus is a new and different type of payment aimed at economic stimulus.
Your next steps if the JobKeeper reduction leaves you short https://t.co/ie82KrRXaq
— ABC Life (@abclifeau) September 30, 2020
At this point the Commonwealth Government has not clearly articulated how the payment should be treated with respect to insurance products. On that basis, insurers appear to have taken the approach described above but have also reserved the right to continue to monitor the situation and alter their approach if required. Other insurers have determined already that for insurance products within superannuation they will take this approach but for stand-alone income protection insurance products they will not treat JobKeeper as employment income and therefore no offsetting adjustment will be made.
If you are sick or injured so can’t work, receiving JobKeeper and you have an income protection policy, the best approach is to submit a claim. It may be declined or it may be reduced in quantum because of the JobKeeper offset but it’s well worth finding out.
If you are in a situation where you are already receiving income protection insurance payments and you are unsure about the appropriate treatment of JobKeeper, it is critical that you contact your insurer or broker to disclose this information and then understand it’s impact.
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.
