Copyright (c) 2014 Kerrie Peacock
When buying Income Protection cover, you must read the entire Product Disclosure Statement to identify all the exclusions. This is because your insurer won't pay any benefits if you lodge a claim arising either directly or indirectly due to exclusions. Income Protection Maternity Leave is one such exclusion.
Income Protection Maternity Leave
Generally, insurers won't consider any claims arising from normal pregnancy. This also includes related aspects such as participation in IVF, normal discomforts (morning sickness, varicose veins, backache, bladder problems or ankle swelling), giving birth, and termination of pregnancy or miscarrying.
What To Do If You Cannot Claim For Maternity Leave
Actually, insurers refuse to pay benefits on maternity leave for very good reasons. The reason for this exclusion is because you have the option of maternity leave/ parental leave pay. According to the Australian Department of Human Services, eligible parents and a child's primary carer can receive a maximum of 18 weeks pay during maternity leave. This is based on the National Minimum Wage, which is currently $622.10 per week before tax during 2013 - 2014.
In fact, you are likely to receive many other benefits, apart from parental leave pay:
(i) Dad and Partner Pay
The Australian Department of Human Services states that dads or partners who care for a child would also benefit from a maximum of 2 weeks pay from the government. Just as in the case of maternity leave, this pay is also based on the National Minimum Wage rate ($622.10 weekly pay before tax). However, it applies if you are not working or have unpaid leave.
Adding up the maternity leave pay and dad and partner pay, you come up with a figure of $1,244.20 weekly pay. This amount is more than sufficient to cater for the needs in an average Australian home. In fact, it is even more than the average weekly total earnings for all Australian employees pegged at $1,115.40 (based on data provided by the Australian Bureau of Statistics).
(ii) Parenting Payment
According to the Australian Department of Human Services parenting payment would be offered to parents or guardians as income support to cater for the cost of raising your children. You can receive this income support together with the maternity leave pay and dad and partner pay.
However, parenting payment strictly applies to singles caring for a child/ children aged below 8 years or couples caring for a child/ children aged below 6 years. The payment varies depending on your family situation:
a. A single parent would receive a maximum fortnightly payment of $713.20, which includes a Pension Supplement.
b. Couples who are separated due to prison, illness or respite care would receive $552.40.
c. Couples receive a maximum fortnightly payment of $460.90.
With income protection cover, you can expect to receive only 75% of your monthly pay if you cannot work due to illness or injury. In fact, such payment would be reduced accordingly, if you have other sources of income, such as a Sickness Allowance from the Australian Department of Human Services (DHS). Fortunately, maternity leave payments and related benefits don't have such restrictions.
Article Source: http://www.abcarticledirectory.com
Kerrie Peacock constantly reviews issues related to income protection and tax and offers useful advice. Visit www.mecovered.com.au/income-protection-maternity-leave for more information on personal insurance.
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