One cyclist’s journey through the maze of Income Protection insurance options and what every amateur, masters cyclist needs to know to avoid financial disaster.
You’re feeling strong and having a great ride with your regular Saturday morning group, when all of a sudden you clip the wheel of the rider in front of you and crash. You break your collarbone and hit your head.
Thank God for helmets.
You’re in hospital for a few days, miss two weeks of work, and have a broken frame to replace.
You feel lucky because one of the other local riders was clipped from behind by a car while training for an upcoming Gran Fondo. They were in a coma for three days and had six months off work. Even now, they can only work three days a week because of their injuries.
Your private health insurance will pay for some of the hospital bills, and your bike is insured, so at least you can replace the frame with the latest model. But what about your income protection insurance?
You signed up for income protection insurance a couple of years ago when you took out a bigger mortgage and had your first child. Smart move, right?
What if you were off work for three months and the following scenario played out:
Your insurer denies your income protection claim because you were training for a race later in the year, and they know you did a similar event last month. Under your income protection policy ‘competitive cycling’ is excluded so your income protection claim is declined by the insurance company. It doesn’t make any sense. What have you been paying premiums for this whole time?
You took out income protection so that if you ever did have a bike crash your income would be covered. Now you find out your policy has a ‘competitive cycling exclusion’ and you’re not covered. This is the first you’ve heard of this exclusion…..
Ten out of the eleven major ‘income protection’ insurers I have researched will deny an income protection claim resulting from a cycling crash if the cyclist is regularly participating in organised events OR is training for an event in the future.
You don’t need to be racing at the time of the crash to have your claim declined. You could be training for an event or commuting. Be warned, insurance companies can stalk you on Strava to prove you have been racing – more on this later.
It’s strange that we’re punished and not rewarded for riding our bikes and staying fit.
The problem is that cycling is considered a ‘race’ if the event:
a) Has a time recorded – such as a time trial or triathlon; or
b) Is done over a designated distance – like a Gran Fondo; or
c) You are allocated a finishing position– a criterium, track event or Gran Fondo
The ‘competitive cycling exclusion’ is also likely to apply if you crash while training for one of the above events.
Professional bike riders are virtually uninsurable for good reason. They crash a lot, take huge risks on descents,and tend to experience career ending injuries.
If you’re a rider who competes in a few masters’ races a year,enters the odd criterium, or even participates in some of the larger community events like the Sydney to the Gong bike ride, or B2B you are at risk of your income protection claim being denied if you crash your bike and cannot work.
However, not all income protection insurers believe that amateur, competitive cyclists shouldn’t be offered income protection insurance.
Some even reward you for riding your bike………keep reading for more details.
That’s me…..I made sure that i was in the big chain ring for the photo 🙂
Why did I undertake this research on income protection for amateur cyclists?
To set the scene, I’m a husband, father, business owner, and the main breadwinner for our household. I also happen to compete in amateur cycling events such as criteriums, Grand Fondos, and the odd triathlon whenever my dodgy calf allows me to. If I come off my bike and I can’t work to earn an income my family will be in financial trouble.
I am also a Financial Planner, so I’m aware that many insurance companies wrongly believe that cycling is a high-risk sport and therefore won’t cover cycling related claims through their income protection policies. Other sports classified as high risk include skydiving and motor cross racing. Does cycling really belong in the same category?
Cyclists are generally fit, healthy, and lean, with fewer medical issues than your average couch potato. You would think that income protection providers would reward us for being so fit, healthy, and disciplined when in fact the opposite is true due to a little-known ‘competitive cycling exclusion’ clause that almost all insurers have.
The ‘competitive cycling exclusion’ can include being involved in an accident while training for an event, or even just commuting.
If you’re reading this, there are two main points you should immediately consider:
1) If you already have Income Protection insurance, only one major insurance company in Australia covers you for cycling related accidents if you ride or have ridden competitively. If you are not with this one insurance company your current income protection policy may not cover you for cycling related injuries and any insurance claim may be declined.
2) If you plan to apply for Income Protection in the future, most insurance companies won’t cover you for cycling accidents, but they may not be upfront about this until it’s too late and your claim is declined.
The Results from my Research – Income Protection for Cyclists
Here are the results of an exercise that I undertook when I started racing local criteriums and Gran Fondos and had to update my own personal income protection insurance cover.
I contacted the 11 major life insurance companies in Australia to ask if I’d be covered under their Income Protection policies if I was regularly racing my bike.
Here are the results (I can’t name the insurers for legal reasons):
What about insurance through my Cycling Australia race license?
Your Cycling Australia or Triathlon Australia licence offers you a minimum level of income protection cover.
However, could your family survive on $500 to $700 per week if you couldn’t work?
Plus, payments stop after a maximum of 12 months.
So, let’s have a closer look:
|Income Protection for Cycling Accidents||Cycling Australia||Triathlon Australia|
|Maximum payment||$500 per week||$700 per week|
|Maximum payment duration||12 months||12 months|
|Does the policy cover you if you get sick and can’t work?||No – cover is for accident only||No – cover is for accident only|
Comparing the Numbers
Let’s say you are a 40-year-old masters cyclist earning $100,000 per year. Income Protection insurance can cover up to 75% of your salary. Payments can continue until you are 70 years old.
|Cycling Australia||Triathlon Australia||Insurer 11 – Income Protection for Cyclists|
|Maximum income protection payment||$500 per week||$700 per week||$1,562 per week|
|Maximum Payment Length||12 months||12 months||360 months|
|Maximum total payment (before tax) – if you could never return to work||$26,000||$26,000||$2,249,280* = total payments between now and age 70|
|Premiums||Part of your licence fees||Part of your licence fees||Tax deductible **|
|Type of Cover||Accident only||Accident only||Accident and illness|
|Broken Collarbone***||$0||$0||$9,300 lump sum payment (1.5 times your monthly insured amount – even if you don’t miss a day of work)|
* Assumes no indexation of benefit payments. All benefits are taxed at your marginal tax rate.
** Tax deductible when held in your own name – that is not through your super fund
*** If the ‘specified injury’ benefit is selected. This is an optional extra and will increase the insurance premiums.
Insurance Companies Can Stalk You on Strava!
“If it’s not on Strava it didn’t happen” – said every cyclist, ever!
Your use of Strava can either work for you or against you when it comes to income protection. Let me explain:
Your Strava history works against you if you have existing income protection with insurers 1 to 10 as detailed above, or through your super fund. If you claim, the insurance company can search your Strava history to look for the following:
• Have you competed in previous events or races?
• Are you training for an upcoming event or race?
• Did you fail to disclose that you were competing in an event during the time of your accident?
If the answer is ‘yes’ to any of the above, insurers 1 to 10 will likely deny your claim for income protection benefits.
On the other hand, insurer 11 rewards you for using Strava. Let me explain:
1. You take out income protection insurance with insurer 11 and you are covered for amateur competitive cycling
2. You link your Strava app to the insurers iPhone or Android app so the insurer can see your Strava account
3. You ride
4. You upload your ride on Strava
5. You receive reward points from the insurer for being healthy and exercising
6. With enough exercise recorded on Strava through the year, you are rewarded with a 20% discount on your income protection premiums & 50% cash back on Qantas flights – including sale fares.
That’s right, 10 insurance companies will use Strava against you, while one will actually reward you for using Strava. Why not get rewarded for what you are already doing – i.e. riding your bike and tracking it on Strava?
Call to Action: Income Protection for Cyclists
My research clearly indicates that cyclists and triathletes have unique needs for their income protection cover.
- If you have an existing income protection policy, email or call me with the details of your policy and I’ll let you know if you’re covered as a competitive cyclist.
- If you are thinking about applying for income protection cover, speak to a Financial Planner who is also a competitive cyclist or triathlete. When I spoke to other Financial Planners about my research and findings, I did not come across one person who had a detailed understanding of the ‘competitive cyclist exclusion’ for amateur or recreational cyclists.
Spot the sandbagger in the light blue!
Pat – sans lycra
Financial Planner & Managing Director of Assure Wealth
Average ‘B’ grader on a bike
Constantly injured triathlete
Learn More About Pat Casey