Income protection insurance comparison
Income protection insurance can help if you lose your income. Compare options in seconds.
Updated . What changed?
Our jobs give us so much security. They keep a roof over our heads and food in our stomachs. So what would happen if you were suddenly unable to earn a living? A serious injury or long-term illness can easily stop hard-working Aussies from bringing home a salary - and they often come without warning. Income protection insurance can make those situations far less stressful. It means you'll still be able to claim up to 85% of your normal wage even though you're out of action.
Income protection insurance comparison for Australia
You'll notice we haven't included prices in our comparison table. That's because your quote is largely impacted by your age, lifestyle and level of cover. Instead, you can compare features then hit the link to tailor your quote. If you're a high earner, keep an eye out for the maximum monthly benefit as it varies between brands. This is the most you'll ever be able to receive per month. Waiting periods are also worth looking at. That's the period of time you need to be out of work before you can claim.
What's in this guide?
- How does income protection work?
- Is income protection insurance right for me?
- What do I need to know before getting started?
- What can I use income protection insurance benefits for?
- How much income protection insurance do I need?
- How much can I expect to pay for income protection insurance?
- What factors affect the cost of income protection?
- Is income protection really worth it?
- Are there any other benefits to income protection insurance?
- What types of income protection insurance are there?
- What brands offer income protection?
- What doesn't income protection cover?
- What if I'm made redundant?
How does income protection work?
Income protection insurance is essentially an insurance policy for your salary. If you become too sick or injured to earn a living, the income protection policy will kick in and act as a replacement. In some cases, it will even replace your salary if you're made redundant.
However, income protection insurance will only cover a maximum of 75%-85% of your salary, depending on which policy you choose. That means if you earn $5,000 a month, your potential benefits will be capped at $3,750-$4,250 a month. As well as limiting the payout amount, income protection insurance also limits the length of time you can receive payouts. Usually, the maximum is either 2 or 5 years. In some cases, you may be able to receive benefits up until the age of 65.
Is income protection insurance right for me?
There's an easy way to figure out if you could benefit from income protection insurance:
If you answer NO to any of these questions, you should seriously consider income protection insurance:
- Would you be able to get by for more than a few weeks without your income?
- Do you have savings that would tide you over for a few months, or even years?
- Are you entitled to government benefits and would they be enough to pay your bills?
- Are you entitled to annual sick leave and workers compensation insurance?
If you answer YES to any of these questions, you should seriously consider income protection insurance:
- Do you have any dependents - such as a child or spouse - who rely on your income?
- Are a small business owner or self-employed?
- Do you have any financial obligations, such as a mortgage or rental agreement?
- If you were injured or ill, would you prefer private healthcare
When should I get income protection insurance?
When you have financial obligations, such as a lease, mortgage, or car loan
When you are planning to have a family and your partner may take extended time off
When you become self-employed or start a business
When you have a partner or dependents who rely on your income
What do I need to know before getting started?
Comparing income protection insurance online is the easy way to find a policy which is right for you. However, there are some key terms you'll need to understand before getting started:
Maximum monthly benefit
This is the highest possible benefit.
Usually, it's around $10,000 but can reach as high as $25,000. If you earn less than the maximum monthly benefit amount, you won't be impacted. However, high earners should pay particular attention to this.
Maximum % of income covered
Some insurers will cover up to 75% of your income while others will cover up to 85%.
As long as you don't exceed the maximum monthly benefit, this feature is what tells you how much you'll potentially be able to claim.
Maximum benefit period
This is the maximum length of time you'll be able to claim benefits.
It varies between 2 years, all the way up to the age of 65. This doesn't mean you're guaranteed benefits for this length of time though. You can choose a shorter period, or you may recover before the maximum period has been reached.
Waiting period options
Insurers apply waiting periods before you can make a claim.
It's the length of time you have to wait between finishing work and lodging a claim. It varies between 14 days all the way up to 3 months. The longer the waiting period, the cheaper the premium.
This is the age at which you will no longer be able to renew your policy.
For most insurance companies, this is when you reach 65 or 75 years old.
This means premiums are calculated based on your age.
The younger you are, the cheaper your premiums will be. However, your premiums will go up every year and it can be tough to figure out how expensive your policy will be in the long-run.
This means your annual premiums aren't based on age.
They'll start off more expensive than stepped premiums, but the price rises will be much more gradual. It's much easier to get an idea of the long-term cost with level premiums.
Most income protection policies will offer some additional benefits.
These may be complimentary or they may come at a cost, but they're a great way to differentiate between policies and tailor cover to suit your needs.
What can I use income protection insurance benefits for?
Income protection insurance is designed as a temporary replacement for your salary, so you can spend it however you like. Remember, you'll have a little bit less to work with because income protection will never cover more than 85% of your wage, but it can still help with:
Your rent or mortgage
Medical expenses related to your illness or injury
Regular bills including utilities, school fees, and home insurance
Credit card bills, car loans, and other debts
Daily living expenses, including groceries and household goods
What's the maximum amount of cover I can get?
In Australia, the maximum amount of income protection you can get is the equivalent of 85% of your regular earnings. However, some insurers will only cover up to 75% of your income. Use the calculator below to see how much you could potentially claim on a monthly basis.
Calculate how much income protection you need
How much income protection insurance do I need?
Although it's possible to insure up to 85% of your income, you might not need or want to. If you choose to insure a smaller percentage of your income, your monthly premiums will be lower. So how do you figure out how much of your income to insure? Well, start by asking yourself these important questions:
How much of my wage is essential?
If you could easily live on 50% of your wage, there might not be much point getting a policy which covers 85% of it. This could easily be the case if you have a passive form of income, like an investment property, or a partner who also earns a wage.
How big is my emergency fund?
If you've built up a decent emergency fund over the years, you might only need to insure a smaller portion of your income. You'll have to tap into your savings to supplement the rest, but that's what it's there for.
How long can I be on income protection?
There are two ways to answer this question - how long you hold a policy for and how long you can receive benefits for:
How long can I hold a policy for?
Until you reach the expiry age listed in your PDS. For most insurers, that will be when you turn 65 or 75. However, because income protection gets more expensive as you age, the policy may become unaffordable by that point.
How long can I receive benefits for?
However long the benefit period is listed as in your PDS. For most insurers, it's a maximum of 2 or 5 years, but some will pay out until you reach 65. However, you can only receive benefits while you're unable to work - if you recover and can return to work, your benefits will stop.
How much can I expect to pay for income protection insurance?
The price you'll pay for income protection insurance will vary significantly depending on lots of different factors. However, we did some cost research to give you a rough idea of what you can expect to pay in different scenarios.
Sofia: $45 a month
☑️ 30 years old
☑️ Graphic designer
Caleb: $84 a month
☑️ 40 years old
Jess: $222 a month
☑️ 50 years old
Luca: $149 a month
☑️ 60 years old
Example income protection insurance quotes
Your income protection insurance quote is highly dependent upon your own personal circumstances. The tables below show just how much a quote can change due to occupation, sex, and smoking habit.
What factors affect the cost of income protection?
It's hard to give an accurate picture of how much income protection might cost because the price can be influenced by many different factors.
|Biological sex||Premiums are generally cheaper for men|
|Age||Younger people pay less for income protection insurance|
|Profession||People in high-risk or very physical jobs will pay more for income protection|
|Health||People with pre-existing medical conditions may pay more or face more exclusions|
|Smoking habit||Smokers will pay more for premiums or be declined cover altogether|
|Benefit amount||The higher the potential monthly benefit, the higher the premiums|
|Waiting period||Setting a longer waiting period will reduce your premiums|
|Benefit period||A shorter benefit period will mean cheaper premiums|
|Additional benefits||Policies with lots of added extras may be more expensive|
|Hobbies||People with high-risk hobbies may face more exclusions or higher premiums|
Is income protection really worth it?
For a lot of people, yes. Our research shows that a healthy 40-year-old can easily protect $3,000 of their monthly income for somewhere between $40 and $100 a month. Even if we use the upper limit of that scale, it's only $1,200 a year. In many cases, income protection insurance is cheaper than car insurance, it's cheaper than health insurance, and it's even cheaper than a gym membership.
While all of those other expenses are important, they can't save your car or home from being repossessed, they can't cover your kids' school fees, and they can't pay for groceries that you wouldn't be able to afford if you suddenly lost your job. Income protection insurance can.
Are there any other benefits to income protection insurance?
Yes. Heaps of them. In fact, we looked at 10 different income protection insurance policies and found a total of 21 extra benefits. We've listed them below, so if you come across any extra benefits and aren't sure what they mean, you can use the table below to double-check. Remember, these extra benefits will vary between different insurers and they may be complimentary or they may cost you extra. Always check with your insurer to be sure.
|Benefit||What it means|
|Death benefit||A lump-sum benefit to your family if you die|
|Terminal illness benefit||Pays a lump-sum if you're diagnosed with a rapidly-progressing terminal illness|
|Permanent disability benefit||An extra lump sum if your injury or illness makes you permanently disabled|
|Partial disablement benefit||The insurer may pay a reduced benefit if you are still able to work in some capacity|
|Specific sickness or injury||If you suffer a specific sickness or injury, the insurer may pay a lump-sum benefit|
|Recurring disablement||If you return to work for a short time and then suffer a recurrence of the same injury or illness, you won't have to serve a second waiting period.|
|Kids injury benefit||A lump-sum if your child sustains a specific injury, or in some cases a specific illness|
|Rehab benefit||An extra monthly payment to cover the cost of rehabilitation and help you return to work|
|Return to work||Pays a bonus if you complete an approved rehabilitation program and return to work.|
|Needle-stick injury||This will pay a benefit if you become infected with a certain illness as a result of a needle-stick injury or splash injury while at work.|
|Elective surgery||Pays a monthly benefit if you remain totally disabled due to cosmetic or elective surgery|
|Spouse||If your partner or spouse has to stop working due to your medical condition, the insurer may pay a monthly benefit.|
|Nursing care||If you need the full-time care of a nurse, the insurer may pay a benefit before the waiting period is up.|
|Holiday injury||A lump-sum if you're injured on an Australian public holiday, a public school holiday, or when you're at least 200km away from home|
|Accommodation||Covers accommodation costs for any immediate family members if you are totally disabled and confined to a bed or hospitalised more than 100 kms from home.|
|Relocation||Reimburses the cost of a flight home if you are permanently disabled outside of Australia|
|Automatic indexation||To help protect against inflation, the insurer may automatically increase your benefit amount in line with the CPI.|
|Premium pause||This allows you to pause your premiums, and cover, for a set period of time and for pre-agreed reasons.|
|Premium waiver||If you're receiving benefits, the insurer will waive the premium throughout that period.|
|Guaranteed future insurability||Allows you to increase your monthly benefit by a certain percentage when your salary increases, without providing further evidence of your health.|
|Member benefit||May pay an additional benefit if you have other forms of insurance with the same company.|
What types of income protection insurance are there?
There are types of income protection insurance - retail, direct, and through a super. Each option has its own pros and cons.
|Retail||You'll usually buy a retail policy after speaking to a broker||Speak to a broker|
|Direct||You'll buy a policy directly from the insurance company||Compare online|
|Super||Your super fund will provide cover to its members. It may be optional.||Learn more|
What brands offer income protection?
Income protection insurance is a very popular product in Australia and there's no shortage of options. The table below shows the full list of direct Finder partners, as well as the insurance companies our broker partners collaborate with.
What doesn't income protection cover?
Although income protection insurance is designed to kick in when you're too sick or injured to work, there are some exceptions to the rule.
❌ Normal and uncomplicated pregnancy
❌ Acts of war or terrorism in countries that have a do-not-travel warning
❌ Self-harm, including exposing yourself to risks of sickness or injury
❌ Illness or injury as a result of criminal activity
May not be covered
❌ Back pain, unless it lasts more than a set period
❌ A football injury, unless it lasts more than a set period
❌ Pre-existing conditions
❌ Some dangerous sports
❌ Some dangerous occupations
Remember, exclusions will vary between different insurance companies so always check your PDS carefully. If you're unsure about anything, contact the insurer directly.
Is income protection the same as life insurance?
There are many different types of life insurance. Income protection is just one of them. It's different from most other types of life insurance policy because it provides a monthly benefit, rather than a lump-sum. The table below shows the different types of life insurance, as well as what they do. Often, you can mix and match to create a package with multiple forms of protection. Or you can take out one standalone policy if you feel that's enough.
|Type of policy||What it does|
|Life (death) cover||Pays out a lump-sum if you die or, in some cases, are diagnosed with a terminal illness.|
|Trauma insurance||Pays out a lump-sum if you're diagnosed with a specific medical condition.|
|Total and permanent disability (TPD)||Pays out a lump-sum if you become totally and permanently disabled due to illness or injury. May pay out a partial benefit if you are partially disabled.|
|Funeral insurance||Covers the cost of your funeral up to a certain amount|
|Personal accident||Pays a lump-sum if you're injured or killed. Does not provide illness cover|
|Mortgage protection||Covers your mortgage payments if you die, become seriously ill, or lose your job|
|Salary continuance||Like income protection but more restrictive. Only available through your super.|
What if I'm made redundant?
Some insurance companies will also provide income protection insurance which pays out a benefit if you're made redundant. Be aware though, the benefit period is usually capped at 3 months and adding this option to your policy will make it more expensive.
|Brand||Redundancy option?||Learn more|
*Some insurers temporarily suspended redundancy cover during COVID-19. Check directly.
Still not sure?
Income protection insurance can be tricky to understand at first - but don't give up. Give our beginners guide a go and see if that helps.
Or, if you're looking for a bit more info on how pricing works, check out our research on the average cost of income protection insurance.
If there's still something you can't find - feel free to drop us a comment. We'll do our best to clear things up for you.
Who can apply for income protection insurance?
Is it better to buy directly from an insurer or get help from an advisor?
What if I already have cover in my super?
Can I get cover if I only work part-time?
Can I get income protection without a medical?
Does income protection cover pregnancy?
Are premiums tax-deductible?
Read more on this topic
Income protection for couples Income protection for couples ensures your partner isn't hurt financially if you are temporarily unable to work due to illness or injury.
Income protection for cyclists Income protection for cyclists can provide you with a monthly payment if you're involved in an accident, providing you with peace of mind and time to get better.
Coronavirus: Will income protection cover me? Learn how income protection can help – whether you’ve already got coverage or you’re thinking about buying it.
Income protection for anxiety Find out how you can get income protection insurance for anxiety
Manufacturing and coal-mining communities more likely to experience depression Manufacturing and coal-mining communities more likely to experience depression, according to the Queensland University of Technology.
Qantas Income Protection Get bonus 100,000* Qantas points when you apply for income protection from Qantas Insurance. T's & C's apply.
Sick leave Australia Find out why income protection is an important tool to combine with your entitled sick leave.
Money Hack: Earn a boatload of Qantas Points with Qantas Assure Take out income protection from Qantas Assure before 31 August and earn up to 100,000 Qantas Points.
Ask an Expert