Income Protection Claim Denied or Reduced? Get Expert Help to Fight Back

Income protection (IP) insurance is a private insurance product (held inside or outside super) that pays a percentage of your pre-disability income when you are unable to work due to illness or injury, regardless of whether the cause was work-related. Workers compensation is a no-fault statutory scheme that applies specifically to workplace injuries and diseases — it is administered under state legislation such as the Workers Compensation Act 1987 (NSW) or the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic). You may be entitled to both, but IP policies often require you to offset workers compensation payments, so understanding the interaction is important.

Own occupation income protection policies pay benefits if you cannot perform the duties of your specific occupation at the time of disablement — even if you could technically work in a different role. Any occupation policies only pay benefits if you are unable to perform any occupation for which you are reasonably suited by education, training, or experience. Own occupation cover is significantly more generous and usually more expensive. The definition that applies to you is set out in your policy document, which should always be reviewed before accepting an insurer's refusal based on occupational assessments.

Pre-existing condition exclusions operate differently depending on whether the exclusion was specifically noted at policy inception or whether the insurer is relying on a general exclusion clause. Insurers must prove that the current condition is the same as — or directly related to — a condition that existed at the time of policy issue. These exclusions are often applied too broadly and can be successfully challenged where the current condition has materially changed, where the applicant was unaware of the earlier condition, or where the insurer failed to ask appropriate health questions at policy inception. An insurer's duty of disclosure obligations under the Insurance Contracts Act 1984 (Cth) are also relevant.

After completing the insurer's internal dispute resolution (IDR) process, you may lodge a complaint with the Australian Financial Complaints Authority (AFCA). AFCA first attempts to resolve the matter through registration, referral back to the insurer, and conciliation. If the dispute remains unresolved, an AFCA panel will review submissions from both sides and make a written determination. AFCA can award payment of the benefit, interest on overdue payments, and compensation for non-financial loss in some cases. The process is free for complainants and AFCA's determinations are binding on the insurer if you accept them.

Yes. The benefit period (how long payments will continue) and the waiting period (the initial period before payments begin) are defined in the policy and cannot be unilaterally changed by the insurer after policy issue. However, insurers sometimes attempt to terminate benefits before the stated benefit period has expired by claiming a change in the claimant's medical condition. Disputes about benefit period termination are among the most litigated income protection issues. A lawyer can assess whether the insurer has a legal basis for stopping payments and pursue reinstatement if not.

Yes — income protection payments are generally treated as assessable income under the Income Tax Assessment Act 1997 (Cth) and are taxed at your marginal rate. This is because premiums for income protection insurance held outside of super are generally tax-deductible, while benefits received are taxable. For income protection held inside super, the tax treatment follows superannuation rules and applies differently. If you are in dispute about the amount being paid, it is important to understand the gross versus net benefit position so you can accurately assess what you are owed.