The regular payment amount you receive from an insurance policy, particularly for income protection insurance. This is typically a monthly payment expressed as a dollar amount or percentage of your pre-disability income, such as $6,000 per month or up to 70% of earnings.
The benefit amount is the monthly income you receive from an income protection policy if you cannot work due to illness or injury. It is set when you buy the policy and disclosed in the PDS, then paid each month while you remain on claim.
Following APRA's October 2021 reforms, Australian income protection policies are capped at 70 percent of pre-disability income. The cap exists to:
Factor these into your decision:
Most Australian policies define 'income' narrowly:
If you receive other income while on claim (workers compensation, employer continuance, super disability benefits), the policy may reduce your benefit amount through 'offset provisions'. Some policies index the benefit amount annually to inflation.
Unlike lump sum cover, the benefit amount continues monthly for as long as you remain on claim, up to the benefit period limit. Australian insurers must explain calculation method, waiting period, and benefit period in the PDS.
A teacher earning $85,000 annually selects a benefit amount of $5,000 per month (approximately 70% of gross income), with a 60-day waiting period and 5-year benefit period
A self-employed consultant with variable income averaging $120,000 chooses an agreed value policy with a $7,000 monthly benefit amount, providing certainty about claim payments regardless of recent income fluctuations
A surgeon with $15,000 monthly expenses selects a $10,000 benefit amount with own-occupation definition, ensuring adequate income replacement if unable to perform surgical duties specifically
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