Income Protection provides financial peace of mind if you were unexpectedly unable to work as a result of illness or accident. All Income Protection policies in Australia have a waiting period; a period of time you must wait prior to the benefits commencing. As the policy holder you are able to select the length of the waiting period when completing the application process. Longer waiting periods mean cheaper premiums; shorter waiting periods incur higher costs.

An additional feature offered by a handful of insurers is the Day 1 Accident Cover. This option is a good idea for those who do not have access to the necessary funds to pay for ongoing living or business expenses during their nominated waiting period. Day 1 Accident Cover worksby offering the policy holder1/30th of their monthly benefit for each day they are off work during the waiting period. This means that someone with a $3,000 monthly benefit would be entitled to $100 for each day during the waiting period. Generally, any benefit accrued from Day 1 Accident Cover will be paid in arrears.

To be eligible to receive the benefits afforded by Day 1 Accident Cover one must firstly have included this optional extra in their policy and fall into any of the following categories:

• Unable to work for the minimum number of days stipulated by your policy following an accidental injury.
• Unable to perform at least one of your regular duties that are essential to produce income.

The minimum number of days you must be unable to work prior to receiving 1/30th of your monthly benefit may be 3, 4 or 30 days. As one would expect, the shorter the number of days selected, the higher the premiums. Either the day the accidental injury occurred or the day you first sought medical advice for the accidental injury are usually considered as the day the Day 1 Accident Cover commences.

As policies vary from insurer to insurer it’s important you carefully read the product disclosure statement (PDS)