Income Protection Pregnancy Premium Waiver

Published: July 28, 2013

A select number of insurers have introduced a Pregnancy Premium Waiver Benefit into their income protection policies in recognition of the financial pressures that exist at the time of the birth of a child.

Starting or adding to a family is an exciting and important time and this pause in income can place additional financial stress on families.

Policy Maximum Monthly Benefit Percentage of Income Covered Benefit Period Waiting Period  
NobleOak Direct Income Protection AIA
$25,000
75%
2 years or up to age 65
30 or 90 days
Receive up to 75% of your monthly income with Income Protection Insurance. Cover essential living expenses when you’re unable to work due to an illness or injury. Consider the PDS. Issuer is NobleOak Life Limited ABN 85087648708. AFSL 247302.

How does the pregnancy income protection premium waiver work?

The pregnancy income protection waiver benefit provides you with peace of mind that:

  • Your valuable cover will remain in place, eliminating the hassle of re applying when returning to work
  • You have continuity of cover as the life insurance company will pay the premium for you for up to 6 months over the life of the income protection policy
  • You have full protection, even though you may be on maternity leave

Insurers now provide extra support for women at this critical time, when income protection insurance is more important than ever.

The benefit payment criteria will vary between each life insurance company. However generally speaking the following criteria must be met:

  • The insured is not working, or
  • The insured is in the 2nd trimester, or
  • It has not been more than 6 months since the birth

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Case Study: Pregnancy income protection premium waiver

Example Part A
Jane, a qualified accountant stopped work for the birth of her first child. She has elected to take 3 months maternity leave, the life insurance company will pay the premiums on her income protection insurance policy for the 3 months that Jane is on maternity leave. If Jane stops work due to a second pregnancy, then she would have 3 months premium waiver remaining (depending on which life insurance company you go with).

Example Part B
At the end of the 3rd month of her maternity leave, Jane fell down the steps at home, injuring her lower back. For 4 weeks she is severely disabled and for a further 6 weeks she is partially disabled. When Jane commenced her policy, she elected to take an additional benefit, which meant that she was paid for the four weeks of severe disablement within the waiting period.

During her 6 weeks of partial disablement, she would have been able to work for 8 hours per week for a period of 2 weeks, had she been working. The other 4 weeks she would have been able to work 15-20 hours per week. If Jane had selected the 10 hour definition at time of application, she would have received 6 weeks claim under the severe disability definition and 2 weeks on partial disability.

If Jane had not had the Pregnancy Premium Waiver Benefit, her family may have suffered additional financial hardship or Jane may have been forced to return to work before she had fully recovered. She could also have stopped her cover and received no payment. Further, if she had tried to apply for cover again, she may have been declined or had a full back exclusion applied.

Would you benefit from an income protection pregnancy premium waiver? If you would like to find out which insurers offer pregnancy premium waivers on their income protection policies it might be worth comparing policies. 

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