Personal accident and income protection insurance are designed to replace your income if you're temporarily unfit to work. However, personal accident insurance (sometimes referred to as personal injury insurance) only covers you for accidental injuries, whereas income protection can pay you if you're sick or injured.
What is the difference between personal accident insurance and income protection insurance?
Can't be cancelled and will continue to renew so long as you keep paying
Still not sure which is for you? Check out our more detailed break down of differences below.
Key Differences
Personal Accident Insurance
Income Protection Insurance
How does it pay me?
Usually in one lump-sum payment
In monthly instalments, similar to your income
When does it pay me?
If you're injured in a common accident. E.g. you suffer a fracture, dislocation, loss of sight
If you become sick or injured and can't work
How much does it pay me?
It's typically based on your income from the previous 12 months
Up to 75% of your income
What can it cover?
Everyday expenses including groceries, mortgage repayments, school fees and more
Everyday expenses including groceries, mortgage repayments, school fees and more
How long can you receive cover for?
5 years
Generally between 2 and 5 years, or up until a specific age. E.g. 65
Are the premiums tax deductible?
Only if cover is in the form of income protection insurance
Yes, premiums are usually tax deductible
Can the insurer cancel the policy on me?
Yes, but more specifically they can choose not to renew your policy.
No, so long as you keep paying your premiums you'll continue to be covered.
What's the application process like?
You generally won't be asked medical questions or tests.
You'll be asked questions about your lifestyle and health including your age, smoking status and pre-existing conditions
Personal accident and sickness insurance vs income protection
Personal accident and sickness insurance is the same product as personal accident insurance insofar as it can be cancelled by your insurer at any time, usually has a maximum benefit period of 5 years and is offered by general insurance companies. The only difference is that it also covers you for some illnesses — though not all — which will be outlined in the insurer's product disclosure statement (PDS).
Income protection insurance, on the other hand, is only available from life insurance companies and protects you if you're unable to work for a specified period due to almost any illness or injury.
Because personal accident and sickness insurance only covers you for specific accidents and some illnesses, it is generally cheaper than income protection, which is far more wide-ranging.
Get an income protection or personal accident quote
Our tables can't show you prices because your premiums are based on your specific circumstances. If you're ready to get an income protection or personal accident quote, compare from our list of providers and click through for your personalised quote. If you'd like to know more about the differences in cost, we've put together a table outlining the costs at different ages. The quote is based on a non smoking, female graphic designer.
You pay the same price as buying directly from the life insurer.
We're not owned by an insurer (unlike other comparison sites).
We've done 100+ hours of policy research to help you understand what you're comparing.
Age
Gender
Smoker
Cost
30
Female
No
$54.21 a month
40
Female
No
$68.85 a month
50
Female
No
$126.39 a month
60
Female
No
$286.55 a month
*Quotes are based on the average of 3 quotes from 3 different insurers as of April 2021. Each person has a $3,000 monthly benefit and the benefit period is as near to 1 year as possible. The waiting period was selected as near to 30 days as possible.
Pros and cons of personal injury and income protection insurance
Here's a summary of the pros and cons of both personal accident and income protection insurance to help you decide which one is right for you.
Personal accident and sickness insurance
Pros
It's usually cheaper than income protection
You don't usually have to answer any medical questions or tests so is ideal if you don't qualify for income protection insurance because of your medical history
It can pay you 100% of your income
You might not have to serve a waiting period
Cons
It only covers you for accidental injuries (unless you pay extra to have some illnesses included)
The insurer can decide not to renew your policy, leaving you without cover and potentially forcing you to lose out on cheaper premiums because of your age
Even if you're still unable to work, the maximum amount of time you can be paid for is 5 years.
In some cases, not all injuries are covered, so read the product disclosure statement (PDS) before you buy
Income protection insurance
Pros
It covers you for most injuries and illnesses
Helps you continue to pay everyday expenses by paying you a monthly benefit worth up to 75% of your current income
You can take advantage of level premiums (they won't go up each year you hold the policy) while you're young and healthy
Your cover will be renewed so long as you keep paying your premiums
You can choose your benefit period (the shorter you choose, the cheaper your premiums will be)
You can receive income protection benefits for years, usually up until you turn 65
Cons
You'll be asked questions about your medical history and lifestyle
Premiums tend to be more expensive if you work in a high-risk job
There's usually a waiting period you'll have to serve before you can receive monthly benefits. It's usually around 30 days but can be longer.
How do the waiting periods work for personal accident and income protection?
With income protection insurance, there's usually a waiting period before your benefit payments kick in; that is, the time you need to wait between submitting an income protection insurance claim and receiving monthly benefits. This period could be a minimum of 14 days but can be much longer depending on the policy that you've chosen. The longer you're willing to wait, the cheaper your premiums will be.
In the case of personal accident insurance, you can sometimes opt for the benefit payments to begin from the first day of your accident without any waiting period. Other options include:
You pay the same as buying directly from the life insurer. Better still, we regularly run exclusive deals that you won't find on any other site – plus, our tables make it easy to compare policies.
We're experts
Our team of life insurance experts have researched and rated dozens of policies as part of our Finder Awards and published 250+ guides to make it easier for you to compare.
We're independent
Unlike other comparison sites, we're not owned by an insurer. That means our opinions are our own and we work with lots of life insurance brands, making it easier for you to find a good deal.
We're here to help
Since 2016, we've helped 270,000+ people find life insurance by explaining your cover options, simply and clearly. We'll never ask for your number or email. We're here to help you make a decision.
Frequently asked questions
It's up to you – but generally, it can be very useful even if you're young and have no dependents. If you have others who rely on your wage, it can be very important.
It's a type of life cover set up to cover lost income if you're unable to work due to an accident; it may cover lump sum payments for some types of permanent incapacity.
Personal accident insurance is a type of life insurance offers a financial safety net should you be involved in an accident and need to take temporary or permanent leave from employment.
Gary Ross Hunter is an editor at Finder, specialising in insurance. He’s been writing about life, travel, home, car, pet and health insurance for over 6 years and regularly appears as an insurance expert in publications including The Sydney Morning Herald, The Guardian and news.com.au. Gary holds a Kaplan Tier 2 General Advice General Insurance certification which meets the requirements of ASIC Regulatory Guide 146 (RG146).
One of the benefits of income protection insurance is that you may have the ability to claim a tax deduction on your premium benefits. Find out if the same rules apply for policies inside super.
Income Protection has specific features designed for dentists including needlestick cover.
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