Waiting period vs benefit period: What’s the difference?


They may sound similar, but your waiting period and benefit period are actually two distinct components of your coverage and can impact your claim in different ways.

Understanding the difference can help you make an informed decision about your coverage.

Waiting period

The waiting period is the agreed amount of time after you're diagnosed with an illness or suffer an injury before you become eligible to make a claim.

If you’re still unable to work at the end of the waiting period, then you will qualify for your payments. We will make your first payment one month after the waiting period ends.  

With AAMI Income Protection, you can choose from a waiting period of between 14 and 90 days. Once the first payment is made, the benefits will continue until you recover or when the benefit period is finished, whichever occurs first.

The importance of choosing the right waiting period

Generally, the longer the waiting period you select, the lower your premiums will be – so a policy with a 90-day waiting period will attract lower premiums than a policy with a 30-day period.

When choosing an income protection insurance policy, it's important to carefully evaluate your financial obligations, savings, and family situation. Consider how you'll manage household bills and debt repayments during the waiting period.

The benefit period

The benefit period is the maximum amount of time for which you will receive benefit payouts. For example, if you select a 2-year limited benefit period, payments will continue until either the 2-year benefit period finishes, or you recover – whichever comes first.

Just like the waiting period, the benefit period you choose will affect your premiums. Generally, the shorter the benefit period you choose, the lower your premiums will be.

At AAMI, the minimum benefit period we offer for illness or injury is 6 months. You may also be able to choose a claim benefit period of 12 months, 24 months or 5 years.

The benefit period may end sooner, if you recover and can return to work.

Factors affecting the benefit period

The length of your benefit period can be impacted by a few different factors. These include the policyholder's age, health and occupation.

During the application process, we will ask questions about your personal circumstances, such as your health and medical history, occupation, income and lifestyle. Your answers to these questions can impact the benefit period for which you are eligible.

Waiting period vs. benefit period: Understanding the differences

When choosing your income protection policy, it’s important to understand the difference between the waiting period and benefit period, and the impact each can have on your policy and claim. It’s also important to understand that the length of both the waiting period and the benefit period that you choose will affect the cost of your premiums.

Ultimately, you should consider your individual needs and circumstances, and what will provide you with the most security, when deciding which waiting period and benefit period suits you best.

To discuss your options or to set up an income protection policy, call the AAMI Life team today on 13 22 44.

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AAMI Life Insurance products, other than in some circumstances the Redundancy Benefit, are 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 companies are not part of the Suncorp Group. TAL companies use the AAMI brand under licence from the Suncorp Group. Redundancy Benefit issued on or before 31st March 2020 was offered by AAI Limited ABN 48 005 297 807 AFSL 230859 (AAI) trading as AAMI which is part of the Suncorp Group. New Redundancy Benefit policies and renewals offered from 1st April 2020 are issued by TAL Life. The different entities of TAL and the Suncorp Group of companies are not responsible for, or liable in respect of, products and services provided by the other.

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 Product you must read the relevant Product Disclosure Statement. The Target Market Determination (TMD) for the product is also available.

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