Time to read : 5 Minutes
Mental health in the workplace in Australia is a challenge for both employers and employees. A report published by Safework into the psychological health and safety in the workplace found:
Mental health conditions accounted for 9% of all serious workers’ compensation claims.
The median time lost was more than 4 times greater than physical injuries and illnesses.
The median compensation paid for mental health conditions was more than 3 times greater than that of all physical injuries and illnesses.
Workers with claims for mental health conditions experienced poorer return to work outcomes.
While these figures show mental health conditions are on the rise – particularly for workers compensation claims – what does this mean for someone who needs extended time off work outside of workers comp?
Firstly, by mental health conditions, we’re talking about:
depression
stress
anxiety
post traumatic stress disorder (PTSD)
panic attacks
behavioural disorders, to name a few.
Note: while these are different conditions, insurers group these together under one umbrella.
How can mental health impact ability to work?
It can manifest in many ways but if we look at depression as an example, an everyday task such as getting out of bed can be an enormous challenge.
If you experience anxiety, you may grapple with completing tasks on tight timelines or social situations such as interacting with colleagues, and you may feel less productive or struggle with tasks you’d ordinarily be able to cope with.
Ultimately, mental health conditions can be complicated and experienced differently by people. But often recovery may mean you’re signed off and unable to work for several weeks, even months.
And for some people no work means no pay, which layers on the stress. It can also be hard – and stressful – to prove a workers compensation claim for mental health, as it needs to be connected to your workplace.
Fortunately there could be another option for you: income protection.
How can income protection help if I need to take time off work for a mental health condition?
Income protection is a form of payment you may be entitled to receive if you are unable to work due to a serious illness – including mental health conditions – or injury. Although this payment is a percentage of your usual take home pay, it’s a way to help you manage your expenses, and keep cash flow coming in.
Most super funds come with a default income protection policy. This may provide you with some protection if you develop mental health issues and you need extended time off work – but there’s usually a limit as to how long they will pay you. This will vary from one policy to another.
Be aware: default income protection in an industry super fund may not be paid out if you have any mental health conditions prior to the policy commencement. The default policies may have fine print that excludes any pre-existing conditions. Refer to the product disclosure statement.
What other options are there for income protection?
You may be able to take out what’s known as a “retail” income protection policy. This type of policy is generally underwritten by an insurance provider. How your policy will cover you will boil down to your situation.
If you have never had any mental health conditions, and you want peace of mind for the future, you will be able to take out a policy with no mental health exclusions. In other words mental health conditions will be included in your cover.
Should you develop a mental health condition after taking out a cover, you’ll be able to make a claim for income protection. Check with your advisor or broker on this before you buy.
If you have never had any mental health conditions, but there is a family history, your insurer will decide whether mental health will or won’t be included in your income protection policy.
If you had mental health conditions in the past but are no longer experiencing symptoms or seeking treatment, your insurer will decide whether mental health will or won’t be included in your income protection policy.
Be aware: that each insurer has their own rules around how long you need to be symptom and treatment free. Always check when looking at policies.
If you are experiencing mental health conditions at the time of taking out a policy, your insurer may decline to cover you or exclude this from your income protection policy. Note that this may be reviewed in future.
What else should I know before taking out income protection?
Income protection for mental health claims is difficult to navigate. Here are a few other things you can do when considering taking out a policy:
Speak to a financial advisor or life insurance broker. Income Protection can be a financial lifeline but it’s also a bit complicated. Having somebody who can help you navigate the ins and outs is invaluable, especially when it comes to understanding the Product Disclosure Statement (PDS).
Be honest when you apply. You’ll have to fill out a questionnaire. It may be confronting but the more truthful you are, the more robust the policy will be.
Have a conversation with an advisor or broker about costs and exclusions. They’ll help guide you through any wording or issues that could cause issues with a claim.
Be aware: while there may be stigma… or you feel embarrassed about your mental health, this is not a time to hide it. Even if you’ve had several ‘good years’, always fully disclose your mental health so should you need to claim income protection down the track, there will (hopefully) be no issues with it being paid out.
Bottom line
With mental health claims on the rise, it’s never been more important to make sure your finances are also protected.
Income protection as part of a standard super policy may be fine if you don’t have a history – or family history – of mental health at the time of setting up your super fund.
If you want to take out a separate policy, remember there are rules around whether mental health will or won’t be included. Always read the product disclosure statement before you sign anything.
If you’re interested in talking to an income protection expert, Compare Club can help.
Go deeper:
Australian readers seeking support and information about suicide and depression can contact Lifeline on 13 11 14. For more information on treating depression, please visit Beyond Blue.
1800RESPECT is a 24-hour national sexual assault, family and domestic violence counselling line for any Australian who has experienced, or is at risk of, family and domestic violence and/or sexual assault.
Financial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
