As a temporary measure to assist our customers impacted by the COVID-19 pandemic, CommInsure is applying an additional method of calculating pre-disability income for eligible income protection claims where indemnity cover applies. The method with the best customer outcome is the one that we will apply.
This additional method may apply for eligible income protection claims on the policies named below, that have indemnity cover and where the claim payment calculation references pre-disability income:
i. Income Care (including Essential Cover)
ii. Income Care Platinum
iii. Income Care Plus
iv. Income Protection sold under the Life and Income Protection PDS (issued under the PDSs dated 3 May 2004 and 26 September 2005)
When you claim for certain benefits under these policies, we calculate any claim payment you become entitled to receive using your pre-disability income.
How does the pre-disability income definition impact your potential claim?
Fluctuations in your income in the 12 months prior to a disability can impact your claim. We calculate your pre-disability income as the average monthly income you received in the 12 months prior to your disability. The maximum benefit payable is typically 75% of your pre-disability income, subject to all other product terms and conditions.
For example if you earned $90,000 for the 12 months prior to your disability, then your average monthly income would be $7,500. The maximum benefit payable would be $5,625 per month. However, if you earned $90,000 p.a. for six months and later earned $60,000 p.a. for the remaining six months, your average monthly income would be $6,250. Then, the maximum benefit payment would be $4,687.50 per month.
Under our temporary measure, should you make a claim and your claim meets the eligibility requirements set out below, we will also calculate your average monthly income for the last financial year that elapsed before you became temporarily disabled. If this amount is greater, then we’ll treat this amount as your pre-disability income.
For eligible income protection claims where:
(a) indemnity cover applies (as stated on your policy schedule); and
(b) you first became disabled, injured or suffered one of the specified medical conditions between 11 March 2020 and 31 December 2020 (inclusive); and
(c) your employment was terminated, you were stood down or your income was reduced due to COVID-19 in the period between 11 March 2020 and the date of your disability, injury or condition
we’ll calculate your pre-disability income based on the greater of your average monthly income for either the:
- 12 consecutive months; or
- latest financial year
immediately preceding the commencement of disability, injury or condition (as applicable).
Methods of calculating pre-disability income
Your average monthly income received during the 12 months before the most recent period of disability/injury/condition.
The greater of:
- Your average monthly income received during the 12 months before the most recent period of disability (or, if applicable, the date of injury or condition which resulted in the Specific Injuries benefit, Crisis benefit or Death benefit becoming payable); and
- Your average monthly income received during the full financial year ended 30 June which most recently elapsed prior to the date of your total or partial disability/injury/condition.
Due to the COVID-19 pandemic, Mia was forced to take a pay cut on 1 April 2020 from her employer. Unfortunately Mia became temporarily disabled on 25 June 2020. When Mia made a claim for income protection benefits under her Income Care policy, Mia provides her financial information for both:
- the 12 months prior to 25 June 2020, and
- the previous financial year 1 July 2018 to 30 June 2019.
Under this alternative method, Mia will receive a benefit based on the higher of these two 12 month periods.
Due to the COVID-19 pandemic, Leo was stood down from his employment on 6 July 2020. He unfortunately suffered an injury on 27 August 2020 and became temporarily disabled. When he made a claim for income protection benefits under his Income Care policy, Leo provides his financial information for both
- the 12 months prior to 27 August 2020, and
- the previous financial year 1 July 2019 to 30 June 2020.
Under this alternative method, Leo will receive a benefit based on the higher of these two 12 month periods.
For eligible claims, the initial pre-disability income calculation will apply throughout the life of that claim. This includes claims where the Recurrent Disability benefit applies.
However the new method of calculation will not apply for income protection claims if:
- your employment was terminated, you were stood down or your income was reduced other than due to COVID-19
- your policy type is Agreed Value, Guaranteed Agreed Value or Extended Indemnity
- the claim event began before 11 March 2020 or after 31 December 2020
- your income didn’t cease or reduce in the period between 11 March 2020 and 31 December 2020 (inclusive)
- the type of income protection payment is not one which is calculated using pre-disability income
- you return to work and then later become disabled again due to a different cause and where the Recurrent Disability benefit doesn’t apply
- the policy terms and conditions have not been met.
You can notify us of your claim at any time. You don’t need to lodge your claim within the above period to be eligible for the modified pre-disability income.
It’s important to note that this temporary modification does not change the policy terms and conditions nor the amount insured or associated premiums.
Of course, to be eligible for a claim payment, you’ll still need to meet the policy terms and conditions. For more information, refer to your Policy Document and any Policy Addendums or Notices that we’ve issued (if applicable).
It’s important that you regularly review your insurance as life changes and you can change or cancel your insurance at any time. If you choose to maintain your existing level of cover whilst your income is reduced, the monthly benefit you’re entitled to receive in the event of a claim may be less than you are covered for. Please speak with your adviser to help you determine whether this insurance is right for you and your current circumstances.