A benefit period refers to the length of time for which your income protection insurance policy will pay out for a particular claim. Insurers generally set two kinds of limitations to the benefit period:
- Maximum time period (for example, 2 or 5 years)
- Age cap (for example, up to age 60 or 65)
Depending on your policy and the insurer, income protection policies can offer benefit periods of 12 months, two years, and even until retirement age (generally 65 or possibly 70), at the end of which your monthly or weekly payments will cease. An income protection insurance policy can only be applied for as long as the life insured is below a certain age, such as 60. Should an entry age cap apply, it may supersede a maximum time period, meaning that a policy with a benefits period of two years could only provide one year of payments to a 59-year-old policyholder if the policy expiry age is age 60.
However it’s important to read the Product Disclosure Statement of your policy to better understand the terms, exclusions, and limitations.