Why income protection can make sense

6 min read

“When you are healthy, you don't really know what people go through when they have a life-threatening disease. You forget how quickly life can change,” says Robert. In December 2013, the 58-year-old copped a shattering cancer diagnosis.

“I had two colon tumours. I went through 10 surgeries, more than 50 consultations and six months of bi-weekly chemotherapy. There were side effects I had never dreamt were possible.”

And it wasn’t just his health that Robert had to worry about. As a self-employed business consultant, he couldn’t get someone else to do his job for him - or take sick leave. “It wasn’t possible to generate any income during treatment. I couldn’t commit to any timelines or meetings or travel arrangements. It was really tough to have to let go of customers who had counted on me,” he says.

An earlier decision that made all the difference

But Robert did have one thing on his side. Years before, he’d made a decision. And though he may not have seen how it would benefit at the time, that decision, in the end, saved him bucket loads of stress - and spared him from additional financial burden.

“In the early ‘90s, I took out an income protection policy. At the time, I was a bit doubtful about paying the monthly amounts, because I was still building up my customer base. But as a business consultant, you sell your hours. So I wanted to cover my fixed costs, in case I was ever unable to work. Of course, I hoped I’d never have to use the policy - it was like buying a car with good safety features.”

Robert insured a salary of $100,000 year, figuring it’d be enough to take care of his family “wherever they lived and whatever their status”. As the years passed, the sum insured increased, as per the terms of the policy to keep up with CPI increases. So two decades later, when Robert became ill, he received $12,000 per month in income protection payments for the twelve months during which he needed financial help.

Physically fitter and stronger than ever

He says, “It was such a relief to not have to worry about paying my fixed costs. The claims team was fantastic. Even though I live in Switzerland*, meaning there’s an eight-ten hour time difference, they were friendly, fast and excellent in all communication. Nothing was too much. Thanks, Bernadette and Andrew, there should be more people like you!”

These days, Robert is in remission. He’s back to full-time work and exercising three to five times per week. He says, “I’m physically fitter and stronger than I’ve ever been. I’m involved in a tight follow-up scheme, with blood tests, colonoscopies and CT scans. I still have some side effects from the chemo, but they’re manageable.

“It was interesting to notice how my confidence in my body’s ability in handling the disease gradually returned, the focus shifted from disease to health. I’m convinced that, without income insurance protection, I wouldn’t have recovered as quickly as I did, given all that I went through. It allowed me to concentrate entirely on my physical and mental health.”

It felt like someone whacked the back of my leg with a baseball bat

It doesn’t have to take a condition as serious as cancer to put someone out of work. Sometimes, an event as ordinary as a social sports match can do it. Just ask Andreas. In April 2015, the fifty year old, who “likes to keep fit”, was playing in the semi-final of a local volleyball comp.

He recalls, “I was serving for the second set. I jumped up in the air, came back down and went to rush forward. All of a sudden, it felt like someone had whacked the back of my leg at full force with a baseball bat. As I was tumbling to the floor, I looked around to see if something had fallen off the roof - or who’d hit me! I wasn’t going to be happy when I found out who it was! But, of course, there was no one within coo-ee of me. I was lying on the floor by myself.

The funny thing was, the other guys hadn’t realised I’d injured myself. They turned around, because the opposition had sent the ball back. And one of them literally looked at me and said, ‘Get up you idiot! The ball’s still in play!’ It was the funniest thing,” he laughs.

What had actually happened wasn’t quite so hilarious. In a split-second, Andreas’s Achilles tendon had ruptured. Ironically, he’s a self-employed remedial massage therapist, who deals with all sorts of injuries. But the rupture made standing for long periods impossible. So he had to cancel all appointments immediately.

“My leg would completely swell up and become painful,” he says. “For the first two weeks, it had to be raised higher than my waist. Then I had to wear a cast for another four or five weeks. And then a boot.” Andreas’s doctor delivered the troubling prognosis that the tendon wouldn’t heal for three months, at least.

Until something strikes out of the blue

Like Robert, Andreas couldn’t replace himself at work easily. And he’d also been savvy enough to take out an income protection policy, despite having “never had any health issues”. He says, “As with most insurances, you never think you’ll need it, until something strikes out of the blue.”

The claims team was straight onto it. Robert recalls “the folks” as “personable and efficient”. Within days, he received the comforting news that he’d be covered for three months, to the tune of $17,000. “The payments allowed me to continue paying off an investment property, which I’d just bought,” he says.

Without having to stress about financial security, Andreas was able to turn his focus to healing. “Slowly, but surely, I was able to do a bit more here and there, and eventually get back into what I do normally. Without protection, things would’ve been much, much more difficult, because my income would’ve dropped considerably.”

Wellbeing 15 Aug 2016
Got kids? Got a good-sized debt, like a mortgage? Then life insurance is a no-brainer. It should be at the top of your To Do list.
2 min read
Wellbeing 28 Sep 2016
Julie reveals her battle for survival against the odds after the near-fatal car accident that damaged nearly everything in her body from the neck down.
3 min watch
Wellbeing 05 Aug 2015
John thought that income insurance only covered physical illnesses. Find out about how not only his depression was covered, but that his experience with BT proved to be a lifeline.
5 min watch

This information is current as at 15/12/2015.

* Note: where the insured person is working overseas, in some circumstances we may apply a repatriation clause for Income Protection policies, which will limit payment of any claim to three months unless they return to Australia.

The claims stories referred to in this article are from real customers and their stories are based on quotes which have been reproduced with their consent.  These stories are for illustrative purposes only and each claim outcome may differ depending on the individual circumstances. 

The Insurer is Westpac Life Insurance Services Limited ABN 31 003 149 157, AFSL Number 233728. The issuer for BT Protection Plans, except for Term Life as Superannuation (USI 81 236 903 448 001) and Income Protection as Superannuation (USI 81 236 903 448 004), is the Insurer. For Term Life as Superannuation and Income Protection as Superannuation (part of the Westpac MasterTrust ABN 81 236 903 448, SFN 281 412 940, SPIN WFS0341AU, RSE Registration R1003970 (Westpac MasterTrust)), the issuer is Westpac Securities Administration Limited ABN 77 000 049 472, AFSL Number 233731, RSE Licence Number L0001083 (WSAL). The trustee of Westpac MasterTrust is WSAL. The arranger of policies paid via Platform Super, except for SuperWrap, is Asgard Capital Management Limited ABN 92 009 279 592, AFSL Number 240695. The arranger of policies paid via Wrap and SuperWrap is BT Portfolio Services Ltd ABN 73 095 055 208, AFSL Number 233715.

The Insurer and WSAL are wholly owned subsidiaries of Westpac Banking Corporation ABN 33 007 457 141 (the Bank). None of the Protection Plans, an interest in the Westpac MasterTrust or Platform Super, nor an investment in Wrap, are an investment in, deposit with or other liability of the Bank. Neither the Bank nor any member of the Westpac Group (other than the Insurer) guarantees the benefits payable in relation to Protection Plans.

The information provided is general in nature and does not take into account your personal circumstances. For terms and conditions relating to BT Protection Plans and BT Protection Plans Reserve, including limits and exclusions, please refer to the appropriate Product Disclosure Statement, available at our website bt.com.au.

BT Financial Group – A Division of Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.