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.
"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."
Read the Finder review of Zurich income protection and receive a quote based on your details. Compare Zurich income protection to other income protection policies available.
Read our guide to the various types of insurance available to the self-employed.
If you have more than one income protection policy they will both pay out – but don't expect to "double dip".
Income protection provides you with income replacement for sickness and illness but not for pregnancy. However, it does offer features to help you out during pregnancy.
Running a small business? Find out how to get income protection to protect your own salary in case you get injured or fall ill.
Income Protection can cover your income in case anything happens to you while travelling overseas, some conditions apply.
Life insurance and income protection serve two different purposes but can both offer valuable cover alone and when combined.
Income protection insurance are generally tax-deductible, so read on to find out when premiums are tax-deductible and how much you can claim.
Compare income protection policies available from OnePath and receive a secure quote from an insurance consultant. Find out how OnePath compares to other insurers.
Looking for the best income protection insurance but not exactly sure where to start? Compare the Finder Awards 2023 insurance winners.