Whether you're a full-time retail worker or a contracted plumber who's weekly hours are never the same, we can all agree on one thing: not being able to work is an uncomfortable thought.
This is why income protection exists. It's a product that keep an income stream coming in if you do get injured or fall ill and are forced to stop working.
If you want to be able to pay your rent and keep your lifestyle going while you recover, then make sure you compare some of the Australia brands on our panel below:
Answer a few questions to work what other cover types suit you.
Answer two quick questions to work out the type of cover you need.
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What is income protection? | Types of income protection | How to compare cover | Income protection guides
Income protection insurance is a product that replaces some of your income if you're unable to work due to serious illness or injury.
The monthly benefit can cover your everyday expenses as well as any long-term debt repayments. This can include the following:
With or without work, you still need to eat to survive.
Think utilities, rent, internet, insurance and all those things that are usually taken care of by your income.
This is a big one. If you stop working you'll still need to cover your mortgage.
Some income protection policies offer a Child Care Benefit which can cover the cost of child care while you are unable to.
Some income protection policies offer a Special Carer Benefit if you require a nurse.
Some income protection policies offer a Family Member Benefit to reimburse a family member if they need to stop work to look after you.
Some brands will combine two policies together: Regular income protection insurance and redundancy cover.
Income protection was able to help Germaine at her most vulnerable.
1. Diagnosed with cancer
At 56, the legal professional was diagnosed with breast cancer forcing her out of her job and was left to treat cancer without any income.
2. Income protection at a difficult time
Fortunately, Germaine had an income protection insurance policy that could provide a monthly benefit of up to 75% of her income. Thanks to this, she was able to take time off, recover and still pay for her ongoing living expenses.
3. Eventually able to return part-time to work
After steady recovery, Germaine was able to return to work in a part time arrangement. A feature of her income protection insurance allowed her to switch to a 'partial benefit' to cover the days where could no longer work.
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WorkCover is a nationwide initiative where all employers pay the government a premium in case one of their employees is injured at work. The employer can then make a claim and WorkCover will pay out compensation and other benefits, but only if the injury occurred at work.
You should view WorkCover as the minimum amount of insurance cover you need
While all Australian employees are covered under WorkCover, that doesn't make income protection insurance obsolete. You should view WorkCover as the minimum amount of insurance cover you need. Potential benefits are not always guaranteed by WorkCover. The table below outlines the differences:
| Income Protection | Workcover | |
|---|---|---|
| Cover for injuries and illnesses that occur during work |
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| Cover for injuries and illnesses that occur outside of work |
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| Cover for rehabilitation expenses |
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| Cover for elective surgery |
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| Cover for your spouses accomodation expenses (if they need be with you away from home) |
|
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*Make sure you check with your provider. This may be an included feature or an additional option.
Income protection and life insurance are not the same products as both forms of insurance serve different cover needs.
We feel like it's important to consider these benefits when looking for an income protection insurance policy:
Although we don't believe price is the most important thing to consider, once you understand what cover you need it's good to see who offers competitive premiums. Here's an idea of how much it costs to get income protection for an annual salary of $45,000.
| Policy | Monthly quote* | Weekly quote* |
|---|---|---|
| Clearview LifeSolutions | $36.69 | $9.17 |
| TAL Accelerated Protection | $40.54 | $10.14 |
| MLC Insurance | $44.76 | $11.19 |
| Asteron Life Complete | $45.20 | $11.30 |
| Zurich Wealth Protection | $48.14 | $12.04 |
*Prices quoted above were taken from finder's quote engine. The quote was based on a 35-year-old, non-smoking male office worker. Quotes are accurate for March 2018 and are subject to change. Any weekly premium mentioned is for reference only as most providers offer yearly, monthly and fortnightly payments.
Cost of income protection insurance
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One of the most important steps when comparing policies is to find out when you will actually be covered. Providers will class disabilities as either partial or total and permanent. The exact definition of total disablement will vary among insurance providers but most will use the following characteristics to approve a benefit payment:
This is where it can get confusing. In this definition of "unable to work" or "disablement", life insurance companies use these different definitions of disability;
This means you are unable to perform the duties of your own occupation a certain number of hours per week (usually 10 hours) after suffering a serious accident or illness.
You will receive up to 75% of your total monthly income. Your total monthly income is based on either your income when you apply or your income when you make a claim.
A key factor that you must consider when taking out income cover is whether to take out an agreed-value or an indemnity-value income protection policy. This will help determine how much you will receive.
Read the full guide to income protection for self-employed workers.
In this case your income and in turn your benefit amount, are assessed at the time you make a claim. Therefore, when you make a claim you will also need to provide financial documents, so if you income has reduced since you applied for the policy, your benefit will also be reduced, however, if your income has increased, your benefit will too. An indemnity policy can also often be around 20% cheaper in premiums than an agreed value policy, and can be ideal if you are in a steady job, where you receive regular pay raises and b
References:
¹ AIHW (2008) Cancer in Australia: an overview 2008, Cancer series no. 46, Cat. no. CAN 42, Canberra
² Fabrizio, E (2007) Australia & NZ Disability Income Experience www.actuaries.org/IAAHS/Colloquia/Cape_Town/Walker_-_Income_protection.pdf
³ AIHW (2008) Australia’s health 2008, Cat. no. AUS 99, Canberra
Some of the icons on this page are sourced from the Noun Project. See attribution below:
If a person has been treated for cancer more than 5 years ago will this affect pay out.
Hi Lorna,
Thank you for your question.
finder.com.au is a comparison and information service and we are not permitted to provide our users with personalised financial advice or product recommendations.
For clarification on whether you are eligible to receive a full claim or not, please refer to your product disclosure statement or contact your insurer.
All the best,
Zubair
I want to have my income protected in case of illness of family members (my parents) in the UK
Hi James,
Thanks for your question. Unfortunately income protection in Australia will only protects the income in the case of an injury or illness to the person who’s income is insured.
I hope this helps,
Maurice