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Waiting Period vs Benefit Period


When taking out an income protection insurance policy, you’ll generally be asked to choose the waiting period and the benefit period. While some people get these confused, they’re two separate things. Although they both have implications at claim time.

The waiting period

The waiting period is the agreed amount of time between when you’re diagnosed with an illness and when a claim can be made. Essentially, a specific time frame needs to be completed before any benefit is paid to the life insured.

If you recover during this time, generally speaking, you won’t be eligible to receive any payments.

Usually, there are a range of options available when it comes to selecting a waiting period. Careful consideration should be put towards deciding what the best waiting period is for you. Remember, you’ll be balancing how long your family is willing and financially able to wait for help, against the cost of the premium required. Generally, the longer the waiting period you select, the lower your premiums will be.

The benefit period

The benefit period is the maximum amount of time you will receive benefit payouts for. For example, if you select a two-year benefit period, payment will continue until either the benefit period finishes, or you recover.

Just like the waiting period, there are usually options available for you to choose. And just like the waiting period, the benefit period will affect your premiums. Generally, the shorter the benefit period you choose, the lower your premiums will be.

Understanding the difference

When choosing your income protection policy, it’s important to understand that the waiting period and benefit period are different, and that both have a role to play in how your policy will function. It’s also important to understand that the length of both the waiting period and the benefit period that you choose will affect the price of your premiums.

Ultimately, you need to assess what’s right for your individual needs and circumstances, and what will provide you with the most security when it comes to your financial situation. Give the AAMI Life team a call today on 13 22 44, if you need assistance or guidance in setting up a life insurance product.

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AAMI Life Insurance products, other than in some circumstances the Redundancy Benefit, is provided by TAL Life Limited ABN 70 050 109 450 AFSL 237848 (TAL Life) which is part of the TAL Dai-ichi Life Australia Pty Limited ABN 97 150 070 483 group of companies (TAL). TAL is not part of the Suncorp Group. TAL uses the AAMI brand under licence from the Suncorp Group. Any advice on this page in connection with the Life products is general in nature and is provided by Platform Ventures Pty Ltd ABN 35 626 745 177 AFS Representative Number 001266101 (PV). PV is part of the Suncorp Group and an authorised representative of TAL Direct Pty Limited ABN 39 084 666 017 AFSL 243260 (TAL Direct). General advice does not take into account your individual needs, objectives or financial situation. Before you decide to buy or to continue to hold a Life Products you must read the relevant Product Disclosure Statement. The Target Market Determination (TMD) for the product is available on our website.