Income protection is an insurance policy you can take out that will pay you part of your income if you're unable to work because of getting sick or injured. Generally, income protection can pay out:
Every fund offers different benefits and definitions of full and partial disability, which will affect what you can claim. Be sure to read the Product Disclosure Statement (PDS) carefully.
| Response | |
|---|---|
| I don't have any of the above insurance | 60.54% |
| Life insurance | 32.52% |
| Income protection insurance | 18.38% |
| TPD insurance | 14.32% |
Put simply, if you would be in financial stress if you stopped earning your income today, you could probably benefit from income protection. This will be more likely if you have dependencies, debts, or if you rely on a single income. Here are a few examples:
There are few times when you might not need income protection.
No expenses of dependencies: If you have low or no expenses, dependencies or debts, you might not need income protection insurance.
Close to retirement: If you've only few more years in the workforce and have enough savings, your response to sickness or injury might just be to retire early.
Low salary: Income protection is most useful to people earning a lot. If you're on a low salary, you might not benefit from income protection. You could look at Total & Permanent Disability insurance instead, whichpays out if you become permanently unable to work, regardless of earnings.
These aren't the only groups who might not need income protection, and you may still benefit if you fall into one of these categories. You should speak to a licensed financial planner before making any a decision.
"If you incur expenses for medical reports required to support your income protection insurance claim, these costs can be tax-deductible. This includes any fees paid to obtain documentation proving your inability to work due to illness or injury. Make sure to keep all receipts and records of these expenses to claim them when filing your tax return."
Unfortunately, Finder research finds most Australians have far less than 3 month's earnings in their savings. According to Finder's Consumer Sentiment Tracker data from July 2023, around 60% of Aussies have less than 3 months of savings. The full data is in the chart below.
The length of time that Australians say they could live off their savings alone, if they were to lose their job tomorrow, according to Finder's Consumer Sentiment Tracker, July 2023.
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.
"My income protection policy is an insurance I hope I never have to claim on – I consider it to be a financial back-up in case something terrible happens. Is it essential? Probably not, but hopefully it will provide my family with some financial breathing space if and when we ever need it."
How much could you save if you lived in a different city in Australia? Let's find out.
Find out what is and isn't covered by AAMI Income Protection and how to apply.
Income protection for couples ensures your partner isn't hurt financially if you are temporarily unable to work due to illness or injury.
Find out why income protection is still useful if you're over 60, and compare cover.
Salary continuance and income protection both serve to replace income in the event of injuries and illness. However, there are some key differences to know about.
Receive income cover for illness or injury with Suncorp Income Protection.
Life insurance and income protection serve two different purposes but can both offer valuable cover alone and when combined.
Find out how much your income protection insurance policy will pay out in the event of a claim. Receive quotes for income protection and apply securely.
Looking for the best income protection insurance but not exactly sure where to start? Compare the Finder Awards 2025 insurance winners.
