Introduction
There's a common belief that “insurers don't pay claims” or that income protection is difficult to claim on. In reality, most issues arise from misunderstandings about how claims work - not insurers avoiding payment.
This page explains:
- Why some income protection claims are declined or reduced
- Do insurers really try to aviod paying claims
- Real claims statistics
- Why your payment might be lower than expected
- Overview of how claims work
âť“ Is Income Protection Hard to Claim?
No - provided the policy terms are met and the required information is supplied.
Claims are assessed against clear criteria, including:
- Medical evidence
- Proof of income
- Ongoing eligibility under the policy
đźš« Why Are Some Claims Declined?
Claims are most commonly declined because:
- The condition doesn't meet the policy's disability definition
- The claimant wasn't employed or earning income immediately before disability (particularly for cover held in Super)
- A pre-existing condition exclusion applies and was excluded
- There was a non-disclosure or misrepresentation at application
- Required medical or financial evidence wasn't provided
🏛️ Do Insurers Try to Avoid Paying Claims?
No. Australian life insurers are heavily regulated by APRA and ASIC and must assess claims fairly and within strict timeframes.
For individual advised income protection policies (like those sold by financial advisers or on this site), most claims are accepted and paid. Disputes are relatively rare and often resolved once additional information is provided.
đź“Š Real Claims Data (APRA - Individual Advised Policies)
Industry data consistently shows that income protection claims are mostly admitted and paid.
APRA statistics for individual advised income protection products (like those sold on this site) (as at 30 June 2025) Life insurance claims and disputes statistics | APRA:
| Metric | Result |
|---|---|
| Claims admitted | 94% |
| Average processing time | 1.4 months |
| Dispute rate | 289 per 100,000 lives |
| Disputes resolved | 86% |
| Decisions reversed after review | 4% |
Most disputes are resolved once additional medical or financial information is provided.
đź’ Why my claim payment might be lower than expected
A common misconception is that income protection always pays the full amount shown on your policy schedule. In practice, payments are based on your actual income at the time you became disabled and adjusted under policy rules.
Payments are usually based on recent earnings. If your income fell before your claim, your benefit may be lower. If your income increased but your cover wasn’t updated, payments are typically capped at the insured amount.
Benefits may be reduced if you receive other income or compensation during your claim, such as employer-paid income or certain government benefits.
These adjustments don’t mean your claim has failed — they reflect how income protection is designed to work.
For a detailed explanation of benefit calculations, offsets, and payment timing, see our Income Protection Claims Process page .
🪜 Claims Follow a Defined Process
Claims follow a defined process that relies on medical evidence, income verification, and meeting policy definitions. While the steps themselves are straightforward, the detail matters — particularly around how disability is assessed and how benefits are calculated. For a full step-by-step explanation of what to expect, typical timeframes, and how payments work, see our Income Protection Claims Process guide .
đź“Ś Key Takeaway
Income protection claims aren't about “winning or losing” - they're about meeting defined criteria with the right evidence. Understanding how claims work puts you in a much stronger position if you ever need to claim.
Frequently Asked Questions
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