Use our handy income protection calculator to work out the maximum income protection benefit amount you can receive.
To use the income protection calculator, enter your regular annual salary in the calculator below and you will receive an estimate of the benefit you will be paid in the event of a claim. Take note that your annual salary can include commissions, bonuses and fringe benefits.
The estimated amount of income protection you need is
Income Protection Insurance Benefit Calculator
The estimated coverage quote provided in the calculator above is determined using the following formula:
(Current Annual Income) x (0.75)
= Your monthly benefit to replace your income
When it comes to deciding if you require the full 75% of your income covered, this is dependant on the total expenses that you encounter on a monthly basis. A good question to ask yourself is: what percentage of your income do your total costs equate to?
Example total of costs vs a $4,000 monthly income
In this case, the applicant may consider taking out 61% of their $4,000 income if they simply want to cover their expenses.
|Expense||Amount per month|
|Credit card debts||$300|
|Costs of living e.g. utilities, food.||$800|
|Other expenses e.g. childcare.||$600|
|Percentage of income||61.45%|
Although most brands state that a maximum of 75% of your monthly income can be covered, there a select insurers that offer options to increase your monthly benefit. Three common ways that you can increase your cover include:
- Trauma booster options. This option increases your monthly income by up to 33% if you suffer a traumatic event or a critical illness.
- Total disablement benefit. This option increases your monthly benefit by up to 33%, if after your waiting period (usually 6 months after) you're still unable to work due to disability.
- Super contribution increase. This option allows you to increase your benefit to 85% of your monthly income, with the additional 10% going towards your super.
There are several factors that influence the amount of the monthly benefit you will receive from income protection insurance, including:
- Your income. Income protection policies will only cover a set limit of your pre-disability income, usually up to 75 or 85 per cent. The insurer will assess your total income when determining your monthly benefit amount.
- Agreed value or indemnity value. These are the two different types of income protection cover. Under an agreed value policy, your benefit amount is calculated based on a pre-determined income amount that you and your insurer agree upon when you apply for cover. Meanwhile, an indemnity value policy requires you to prove your income when you make a claim, so the benefit amount you receive is based on your income at that point in time.
- Policy limit. Each insurer will impose a limit on the maximum benefit amount they will pay each month, for example $10,000 or $12,000, so this could obviously impact upon the monthly benefit you will receive.
- The level of cover you select. Before you apply for income protection insurance, you’ll need to sit down and work out exactly how much cover you need. Once you’ve worked out the monthly benefit you will need to pay your ongoing expenses and continue to provide for your family, you’ll be able to select your desired level of cover.
- The benefit period. When you apply for cover, you’ll be able to select the maximum amount of time for which your policy will pay a benefit - for example, you may have to choose between benefit periods of six months, 12 months, two years, five years, or until you reach the age of 65.
- Any additional options. Most income protection insurance policies allow you to add a range of additional cover options to your policy for an additional premium. If you decide to add extra cover to your policy for rehabilitation expenses or childcare costs, for example, this will have an impact on the total benefit amount you receive.
Working out exactly how much income protection cover will be adequate for your needs can be a tricky task. There’s a huge range of expenses to consider, including everything from mortgage repayments to school fees, plus you’ll also need to take into account whether you have any savings tucked away or you will be partially able to rely on your partner’s income.
But while it can be difficult to work out your ideal benefit amount, it’s essential that you do this before you apply for cover. You need to be sure that the level of income protection cover you have in place will be enough for you to manage financially if you’re unable to work due to illness or injury.
That’s why this income protection calculator is such a good idea. It allows you to calculate your monthly benefit amount and work out if it will allow you to adequately provide for your family and cover your ongoing expenses. So enter your income details into our income protection calculator and start working out the right level of cover for you.
When you take the time to think about it, your income is actually one of the most important assets you have - if not the most important. So if you’re injured or fall ill and you suddenly can no longer rely on your steady stream of income, your comfortable and secure financial situation can get pretty uncomfortable pretty quickly.
Even though you don’t have money coming in from week to week, the ongoing expenses of everyday living keep stacking up. There are mortgage repayments to make, credit card debts to clear, bills to pay, groceries to buy and a range of other expenses to manage. And while you deal with the financial stress of keeping your head above water, there’s also the physical and emotional strain as you try to recover from your medical problems as quickly as possible.
That’s why income protection insurance is such a good idea for anyone who relies on the income from their occupation to meet day-to-day expenses. It provides a financial safety net in case you’re unexpectedly struck down by illness or injury, replacing up to 75 per cent of your regular income each month while you’re unable to work. This provides much-needed peace of mind and allows you to focus on your recovery.Back to top
How much income protection cover do I need?
In order to work out how much cover you require, you’ll need to consider your current financial circumstances and how they will change in the future. Calculate what your ongoing expenses are, how much of your income is used to meet those expenses, and whether you would be able to rely on any other sources of income if you were unable to work.
Can my choice of benefit period affect the cost of income protection premiums?
Yes. The longer the benefit period you choose, the more you will have to pay for income protection cover.
What other factors affect the cost of premiums?
Some of the other factors that affect the cost of income protection premiums include your age, gender, smoking status, overall health, occupation and lifestyle.
When won’t an income protection benefit be paid?
Some common situations when an insurer won’t pay an income protection benefit include if your claim arises from an intentional self-inflicted act, if the claim arises because you were under the influence of alcohol, or if the claim is for any mental disorder or mental illness. Check your PDS for a full list of cover exclusions.