What is indemnity value income protection?

Indemnity value income protection is the standard type of income protection insurance now available in Australia. It bases your payout amount on your actual income in the 12 months prior to you making a claim. This means the benefit you receive reflects your income at the time of disability not a pre-determined amount from when you purchased the policy.

How is my income assessed for an indemnity value income protection policy?

When you make a claim under an indemnity policy, the insurer will typically look at your earnings in the 12 months immediately before you became unable to work. This can include your salary or wages as well as other taxable income such as commissions or regular bonuses. You will need to provide evidence like payslips tax returns or financial statements to support your income claim.

Can I still keep my existing agreed value income protection policy?

If you held an agreed value income protection policy before the regulatory changes in 2020 you are generally able to maintain your existing coverage. However you cannot take out a new agreed value policy or switch to another agreed value product if you did not have one previously. Be aware that making changes to your existing policy might sometimes lead to it being reissued under indemnity terms so it is wise to check with your insurer or a financial advisor before making any changes.

What documents do I need to provide when making an income protection claim under an indemnity policy?

To make an income protection claim under an indemnity policy you will typically need to provide documents that verify your income history, medical evidence of your illness or injury and details about your occupation. Income verification usually includes payslips tax returns, profit and loss statements or other financial records from the 12 months before your claim. The specific documents required may vary between insurers.

What happens if my income fluctuates significantly after I take out an indemnity income protection policy?

With an indemnity policy, if your income decreases significantly after you take out the policy your benefit payout will be based on your lower income at the time of claim. Conversely if your income increases you may be able to adjust your cover to reflect your higher earnings by contacting your insurer. It is important to regularly review your policy to ensure it aligns with your current financial situation.

Can I get income protection through my superannuation fund?

Yes many Australians can obtain income protection insurance through their superannuation fund. This can offer potential tax benefits and convenience as premiums may be paid directly from your super balance. However, cover arranged through superannuation may have different terms, conditions or limitations compared to policies held outside super so it is important to compare these options carefully.

Are there any situations where my income protection claim might be denied?

Yes there are several reasons an income protection claim might be denied. These can include not accurately disclosing your medical history or occupation when applying, making a claim for a condition that is an exclusion on your policy not meeting the waiting period requirements or if your disability does not meet the policy's definition of total or partial disablement. Always read your Product Disclosure Statement carefully.

Agreed value income protection (RIP)

Agreed value income protection is no longer available for new policies in Australia.
APRA mandated that new policies base payouts on your income 12 months before a claim.
Compare income protection focusing on benefit amount, waiting periods and cost to get a better policy for you.

Income protection insurance has long been a valuable safety net for Australians, providing financial support in the event of illness or injury. One type of income protection, agreed value, was particularly popular for its guaranteed benefit amount. However, due to industry changes and regulatory interventions, agreed value income protection is no longer available for new policies.

Understanding Agreed Value

With agreed value income protection, policyholders locked in a specific benefit amount when they first purchased the policy. This meant that regardless of any income fluctuations after the initial purchase, the benefit remained fixed. This was particularly attractive to those with variable incomes, such as self-employed individuals or those with commission-based roles.

Regulatory Intervention

In 2020, the Australian Prudential Regulation Authority (APRA) intervened in the life insurance market due to concerns about the sustainability of individual disability income insurance (IDII) policies. APRA identified several issues with agreed value policies, including:

Moral Hazard: The potential for policyholders to have less motivation to return to work due to the guaranteed benefit.
Unsustainable Costs: The risk of insurers incurring significant losses if policyholders' incomes declined after purchasing the policy.
Deviation from the Principle of Indemnity: Agreed value policies could violate the principle of indemnity, where benefits should not exceed economic loss.

APRA's Mandated Changes

To address these concerns, APRA required insurance companies to:

Cease Offering Agreed Value Policies: New policies must be issued on an indemnity basis.
Base Cover on Income at Time of Claim: Benefit amounts should be linked to income within the 12 months prior to making a claim.
Limit Income Replacement Ratios: Benefits should be capped at a certain percentage of earnings.
Restrict Guaranteed Renewability: Policies should have a shorter guaranteed renewal period.

Impact on Policyholders

The transition from agreed value to indemnity value has significant implications for policyholders. Those with existing agreed value policies have been able to maintain their coverage, but new buyers are limited to indemnity value options.

Key Considerations

When comparing income protection policies, it's essential to evaluate the following factors:

Benefit Amount: Determine the level of coverage you need to adequately support your lifestyle and financial obligations.
Waiting Period: Consider the length of time you're willing to wait before benefits begin.
Benefit Period: Evaluate how long you want the benefits to continue.
Exclusions and Limitations: Understand any conditions that might affect your eligibility for benefits.
Premium Costs: Compare premiums from different insurers to find the best value for your needs.

Comparing Income Protection Policies

To find the right income protection policy for you, use our comparison tool to compare quotes from leading insurers. You can also consult with a financial advisor for personalized guidance.

Compare direct brands for income protection

6 of 22 results

Finder Score	Maximum monthly benefit	Maximum % of income covered	Maximum benefit period	Minimum entry age	Sum insured
9.5 Excellent TAL Accelerated Protection Income Protection	9.5 Excellent	$30,000	Up to 70%	Up to Age 65	19	$1,305 million	Get up to 70% of your income covered with flexible short and long term benefit periods.	Get quote View details Compare product selectionCompare	loading
8.6 Great HCF Income Protect Insurance	8.6 Great	$10,000	Up to 70%	Up to 12 months	18	$22 million	Discount: Get 6 weeks free with HCF Income Protect Insurance. Offer ends 10 Nov 2026. T&Cs apply.	Cover up to 70% of your monthly income by choosing a fund that puts members first.	Get quote View details Compare product selectionCompare	loading
8 Great Medibank Income Protection	8 Great	$12,500	Up to 70%	Up to 5 years	18	Data not available	Discount: Get 10% off when you purchase by 30 Nov 2026. T&Cs apply.	Get quote View details Compare product selectionCompare	loading
9.9 Excellent NobleOak Income Protection Finder Award	9.9 Excellent	$30,000	Up to 70%	Up to Age 65	18	$65 million	Discount: Get 2 months free with NobleOak Income Protection. Offer ends 30 Nov 2026. T&Cs apply.	With NobleOak, you can lock in a policy with a benefit period covering you up to the age of 65. Cover limits may go as high as $30,000.	Get quote View details Compare product selectionCompare	loading
8.5 Great AAMI Income Protection	8.5 Great	$10,000	Up to 75%	Up to 5 years	18	$222 million	Discount: Get a $100 first year discount when you take out a new AAMI Income Protection policy. T&Cs apply.	Get quote View details Compare product selectionCompare	loading
7.5 Great ahm Income Protection	7.5 Great	$10,000	Up to 70%	Up to 5 years	18	Data not available	Discount: Get your first month of cover for free when you purchase by 30 Nov 2026. T&Cs apply.	Get quote View details Compare product selectionCompare	loading

Showing 6 of 6 results

Finder Score - Income Protection

Income Protection is a little complicated and a lot overwhelming. That's why we made the Finder Score, to make it easier to compare Life Insurance products against each other. Our experts analysed over 21 products and gave each one a score rank out of 10, to make it easier to compare Income Protection products against each other.

But a higher score doesn't always mean a product is better for you. Your situation is unique, so your policy choice will be too. Don't think of Finder Score as the final word, but as a good place to start your life insurance comparison.

Read the full methodology

Speak to an insurance specialist to help you find personalised cover

Frequently Asked Questions

Indemnity value income protection is the standard type of income protection insurance now available in Australia. It bases your payout amount on your actual income in the 12 months prior to you making a claim. This means the benefit you receive reflects your income at the time of disability not a pre-determined amount from when you purchased the policy.
When you make a claim under an indemnity policy, the insurer will typically look at your earnings in the 12 months immediately before you became unable to work. This can include your salary or wages as well as other taxable income such as commissions or regular bonuses. You will need to provide evidence like payslips tax returns or financial statements to support your income claim.
If you held an agreed value income protection policy before the regulatory changes in 2020 you are generally able to maintain your existing coverage. However you cannot take out a new agreed value policy or switch to another agreed value product if you did not have one previously. Be aware that making changes to your existing policy might sometimes lead to it being reissued under indemnity terms so it is wise to check with your insurer or a financial advisor before making any changes.
To make an income protection claim under an indemnity policy you will typically need to provide documents that verify your income history, medical evidence of your illness or injury and details about your occupation. Income verification usually includes payslips tax returns, profit and loss statements or other financial records from the 12 months before your claim. The specific documents required may vary between insurers.
With an indemnity policy, if your income decreases significantly after you take out the policy your benefit payout will be based on your lower income at the time of claim. Conversely if your income increases you may be able to adjust your cover to reflect your higher earnings by contacting your insurer. It is important to regularly review your policy to ensure it aligns with your current financial situation.
Yes many Australians can obtain income protection insurance through their superannuation fund. This can offer potential tax benefits and convenience as premiums may be paid directly from your super balance. However, cover arranged through superannuation may have different terms, conditions or limitations compared to policies held outside super so it is important to compare these options carefully.
Yes there are several reasons an income protection claim might be denied. These can include not accurately disclosing your medical history or occupation when applying, making a claim for a condition that is an exclusion on your policy not meeting the waiting period requirements or if your disability does not meet the policy's definition of total or partial disablement. Always read your Product Disclosure Statement carefully.

Finder writers are subject matter experts and use primary sources, in-depth research and interviews with other experts to ensure you're getting accurate, up-to-date information. Articles are fact checked in line with our editorial guidelines.

Thank you for your feedback!

Written by

Tim Bennett

Insurance expert

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A seasoned journalist with over 10 years of experience in news, politics and finance reporting, Tim has previously held roles at the ABC, SBS and Fairfax Media. Tim’s expert insights have been quoted in The Australian, The Daily Telegraph, The Courier Mail and more. He regularly appears on TV and radio, and has been interviewed on 7 News, Sunrise, SBS News, ABC Local, 3AW and 5AA. Tim is passionate about simplifying complex insurance topics for Australian consumers. He holds a Bachelor of Arts (Politics) from Macquarie University and a Tier 1 General Insurance (General Advice) certification, which meets the requirements of ASIC Regulatory Guide 146 (RG146). If you’re interested in a media interview with Tim, please reach out to our PR team at aupr@finder.com. See full bio

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Agreed value income protection (RIP)

It is no longer possible to take out agreed value income protection – an insurer now typically bases a payout on what you earned in the 12 months prior to your claim.