14 Benefits of Income Protection

Interested in applying for income protection but not quite sure of the key benefits?

Income protection provides monthly benefit payment of 75% of injured/sick workers income. In addition replaced income, income protection can also provide:

  • Benefit if policyholder is confined to bed
  • Additional benefit for specified injuries
  • Benefit if the insured passes away or is diagnosed with a terminal illness

Read on for the full list of benefits that income protection can provide.

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14 benefits that income protection insurance policies can provide

    • Income replacement. A benefit is paid (usually monthly) of 75% of the workers income for injuries and illness that has been sustained both at work and at home.
    • Excess contributions to super. Some policies will provide cover for more than 75% of the insured’s income though this must be contributed to their superannuation fund.

In addition to income protection, income protection policies can also provide:

    • Rehabilitation expenses benefit. Will help cover the cost of necessary modifications to the person’s home or necessary appointments as they recover.
    • Rehabilitation program benefit Will help cover costs of insured enrolment in an approved rehabilitation program.
    • Transport benefit. Benefit paid to help cover the costs of transporting the insured interstate or back to Australia.
    • TPD benefit. Benefit paid if the person becomes totally and permanently disabled.
    • Trauma benefit. Benefit paid if insured suffers specified trauma condition.
    • Death benefit. Multiple of monthly benefit paid if insured passes away.
    • Specified injury benefit. Additional benefit paid if insured suffers an injury specified by insurer.
    • Bed confinement benefit. Additional benefit paid if insured is confined to their bed for a defined period of time and is totally disabled.
    • Nursing care benefit. Additional benefit paid to help cover the costs of having a professional nurse to care for the insured as they recover.
    • Cover through Superannuation. Income protection can be provided through superannuation which can be both affordable and easy to apply for.
    • Range of benefit periods. Most policies will offer benefit periods of 2 years 5 years, to age 60 or to age 65.
    • Taxation benefits. Income protection is tax deductible.

Why is it necessary if I'm entitled to workers compensation?

While workers compensation insurance provides income protection cover, it only covers you for injuries or illnesses that occur at work.

What can workers compensation cover?

Some of the events that workers compensation can cover include:

  • Hospital treatment expenses
  • Medical treatment required
  • Ambulance transportation
  • Workplace rehabilitation service
  • Travel expenses to appointments for medical, hospital or rehabilitation appointments

What are the disadvantages of income protection?

While the advantages of having income protection are obvious. There are some drawbacks to people looking to take out cover.

  • You will be assessed based on the level of risk you carry. Each applicant will be required to declare information in the application stages to allow the insurer to determine how much risk they present which will be reflected in their premium payments. This includes characteristics such as;
      • Whether they smoke
      • How old they are
      • Their occupation
      • Pre-existing medical conditions
      • Alcohol consumption
  • Premiums increase as the insured ages. Premium payments will increase as the insured ages as they are considered a greater risk when they are older due to the increased likelihood of developing medical conditions.
  • Most policies will not provide benefit for unemployment. Despite cover being provided for injury or illness, income protection will not provide a benefit payment if the person is to be made redundant.
  • Some providers will not provide cover for people with certain illnesses. Some insurance providers will not provide a person with cover if they deem the person presents too great a risk to them. This can be the case for people suffering certain medical conditions.
  • Taxable if earned income when claiming. While income protection can be tax deductible, it can be subject to tax as earned income when claiming.

While there are some drawbacks of income protection, many can be reduced by taking the time to compare different policy options and through ongoing review of your policy against your changing situation. This will ensure you are not paying too much for your cover and still receiving an adequate level of protection.

Considering taking out income cover?

If you are considering taking out income protection insurance, it is essential to take the time to put in the legwork to assess what policy features you require for your situation. Trimming off expensive policy extras can save you thousands in the long term. An insurance consultant can assist you through the application process by;

      • Helping you determine what features are relevant to your situation.
      • Help you compare hundreds of different policy options at once based on your needs.
      • Help you locate policy discounts. Some policies will offer discounts of up to 5% for taking out joint cover.
      • Help you find affordable cover by finding insurance companies more willing to offer cover for someone of your characteristics.
      • Help you organise and submit the necessary paperwork for your policy application.

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Compare income protection quotes from these direct brands

Product details Maximum cover Maximum Entry Age Cooling-off
Income Protection
Income Protection
Cover up to 85% of your income up to $10,000 per month if you can't work due to sickness or injury. Cover for over 1,000 jobs and full-time, part-time and self-employed. $10,000 60 30 Get quoteMore info
NobleOak Income Protection
NobleOak Income Protection
Receive up to 75% of your income each month to a maximum of $20,000 if you can't work due to serious illness or injury. $25,000 59 30 Get quoteMore info
Income Protection
Income Protection
Receive up to 75% of you income (up to $10,000 per month) of your income if you're unable to work due to serious illness or injury. $10,000 59 21 Get quoteMore info
Ezicover Income Protection
Ezicover Income Protection
Cover up to $12,000 income replacement when unable to work in any occupation due to sickness or injury. First month of cover is free. $12,000 60 30 Get quoteMore info

William Eve

Will is a personal finance writer for finder.com.au specialising in content on insurance. While he cannot give personal advice to clients, Will enjoys explaining the intricacies of different types of protective cover to help individuals and businesses find affordable cover that won't leave them underinsured.

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