Income Protection in your 40s

Working and providing as a 40 year old? Protect your income in the event of illness or disability.

With a well developed career under your belt when you’re in your 40s, and a higher income, you also have more to lose in the event of disability or other inability to work. At this stage of life, income protection insurance can be a useful addition to your portfolio.

It can be harder to change careers when you’re older, you have more financial obligations such as a mortgage and kids, and you also need to make sure your retirement savings aren’t drained because of a period of unemployment.

What are the key benefits?

Income protection can help you keep up with your savings plans, as well as your living expenses. Some of the key benefits include:

  • A monthly replacement of you income. Get up to 75% of your salary covered.
  • Cover for injuries and illness. You are covered both in the workplace and outside of it.
  • Redundancy cover on some policies. Some policies will offer redundancy as an additional option.

Find income cover with these direct brands

Name Product Short Description Maximum Monthly Benefit Maximum % of Income Covered Maximum Benefit Period Waiting Period
Help protect your lifestyle with a new Virgin Income Protection policy. If eligible, you can earn 25,000 Velocity Points. Ends 02 September 2019. Min $80/month, min. 6 month policy to earn Points.

5 years
14, 28, 60, or 90 days
Join Qantas Income Protection and earn up to 100,000 Qantas points. T&CS apply including minimum premium and policy hold periods apply to earn points.
5 years
2, 4, 13 weeks or 2 years
Get cover up to 75% (to a maximum of $10,000) of your monthly income.
24 months
30 days
Get income protection cover (up to 75% of your income) without a medical test. Plus, Medibank health insurance members can save 10% off premiums.
5 years
30 or 90 days
Income protection is fully underwritten and benefit period can be tailored to suit your needs.
2 years
30 or 90 days
Receive one month's premiums free if you pay annually. T’s and C’s apply.

24 months
14 or 28 days

Compare up to 4 providers

How much does income protection cost in my 40s?

Here's a sample of quotes for income protection quotes for a $3,000 monthly benefit:

ClearView LifeSolutions$78.51$98.13
TAL Accelerated Protection$78.94$97.72
CommInsure Protection$79.78$97.77
AMP Elevate$80.32$100.34
Zurich FutureWise$81.31$102.08
AMP Flexible Lifetime Protection$85.00$105.97
MLC Insurance$87.85$105.53
AIA Priority Protection$88.66$108.92
Asteron Life Complete$88.20$113.83
OnePath OneCare$93.79$119.52
BT Protection Plans$101.91$125.16
Zurich Wealth Protection$108.42$157.84

Quotes are an estimate taken from our quote engine and are based on a 45 year old office worker from NSW. Data last checked on February 2017.

Why get income protection in your 40s?

Income protection insurance can be particularly useful when you’re in your 40s. This is because you’re probably in the middle ground of having a relatively high income, but you also have a range of financial obligations. There are two features in particular which make income protection insurance a valuable form of cover:

  • Policies can pay benefits based on your usual income. This is usually up to 75% of what you earn.
  • A range of benefits to keep you afloat if you're unable to work. Policies specifically pay out if you are unable to work as a result of disability or illness, and can also include redundancy benefits. This type of cover can offer more certainty in that you might either be working and earning as usual, or will be able to claim income protection benefits.

Income protection policies will generally cost 1% to 2% of your monthly income, with this percentage typically decreasing when you earn more. Both the premiums and payouts are largely based on your average income over the last 12 months so you can take it with you across promotions and other changes.

What should I look at when comparing income protection policies?

1. Conditions of a payout

Depending on your situation a different type of policy might better suit your needs. Policies generally pay out when, due to injury or illness, you are rendered temporarily or permanently disabled. Payments can continue until:

  • You reach the maximum benefit time limit, which is usually several years
  • You are able to work again

Note: You will generally need to be actively looking for work in order to continue receiving benefit payments.

2. If the policy is suitable for you

To see whether a policy suits your needs, look at:

  • The maximum amount paid out: Policies will generally specify that they will either pay out a fixed amount, or 75% of your usual income up to a specific amount. If the limits of a policy are too low, another one might be preferable.
  • How long the waiting period is: This is how long you need to be unable to work before you can start receiving payments. If you’re a sole trader or otherwise don’t have sick leave, or you don’t have enough savings to keep up with living costs for long, it may be worth looking for a shorter waiting period, although this typically costs a bit more.
  • Additional options and features: Policy features may include additional total disablement benefits, cover of rehabilitation expenses, death benefits should you pass away during the period of insurance, additional specified injury benefits and others. These should be considered alongside other differences in the core policy benefits.

3. Your personal circumstances

The level of cover you need and the types of options that suit you may be affected by factors including:

  • Your job risk: A dangerous job has a higher likelihood of injury, while your day-to-day activities can also affect the type of cover you need.
  • Your income: Consider your ongoing expenses in line with your usual income when looking at the suitability of a policy.
  • Your health and pastimes: Health conditions may increase the likelihood of you needing to make a claim at some point, and can also impact your other risks. Similarly, your pastimes, such as playing a lot of sports, can affect the odds of you needing to make a claim.
  • Your finances: Income protection insurance should generally be enough to cover all your regular expenses while you’re not working, such as mortgage payments, education and everyday living costs so you can focus on recovery.

If I get cover now, will my rates change in the future?

Depending on the premium structure you choose, your rates might increase with age or can stay the same.

Stepped vs level premiums

Stepped premiums increase with age, while level premiums are fixed at the same rate over the course of the policy but tend to start off higher.

  • Stepped premiums: You can use a “premium freeze” option available with some policies to freeze your premiums at a set level. They will not increase, but your sum insured may no longer increase to keep up with inflation so an extended premium freeze might leave you underinsured.
  • Level premiums: These are fixed for the duration of the policy.

Income protection policies will typically end at retirement age, or a specific age such as 70 years old. When you’re in your 40s you can look at how much longer you’ll be holding the policy to help you decide between stepped and level premiums, and compare the end cost.

Compare your income protection options

* The products compared on this page are chosen from a range of offers available to us and are not representative of all the products available in the market. There is no perfect order or perfect ranking system for the products we list on our Site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.
Picture: Shutterstock

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