Why Commission Earners Should Check Their Income Protection Wording

The key point was not whether the commission payments were meaningful to the worker’s household budget. They clearly mattered. Instead, the dispute turned on the wording selected for the employer’s group policy. The employer had chosen an income definition based on regular income from employment, rather than an alternative wording that would have more clearly captured regular commission payments. AFCA accepted that the insurer had applied the policy reasonably.

For Australians comparing income protection insurance, the lesson is straightforward: the benefit percentage is only one part of the story. A policy may promise to replace a portion of income, but the real outcome depends on how income is defined, what is excluded, and what evidence is required at claim time. This can be especially important for people with variable pay, bonuses, overtime, profit share, seasonal earnings or business income.

The ruling does not mean commissions can never be insured. It means the wording must support their inclusion. Someone earning a modest base salary plus substantial commission may find that a policy built around base or regular salary provides a much smaller safety net than expected. That gap can become painfully clear only after illness or injury has already interrupted work.

Before relying on employer-provided or superannuation-linked cover, policyholders should review:

• whether commission, bonuses, overtime or allowances count as income;
• how pre-disability income is averaged and over what period;
• whether the policy has a maximum monthly benefit that could cap payments;
• how offsets apply if workers’ compensation, sick leave or other benefits are received;
• whether waiting periods and benefit periods suit household cash-flow needs.

This is also a reminder that group insurance can be convenient, but it may not be tailored to every occupation or pay structure. Workers with complex earnings should compare options rather than assuming their existing cover reflects their actual take-home income.

If commission forms a large part of your earnings, consider asking a financial adviser or broker to review the policy wording before you need to claim. The best time to discover a gap in cover is before illness, injury or mental health challenges affect your ability to work.