Loss of income insurance

What types of cover are available in Australia to protect loss of income?

For those of us who have been earning regular money for a long time, there is usually a relatively heavy reliance on the money that we bring in. For most people, the more they earn the more they tend to spend, as their lifestyles adapt in line with their income. People rely on their steady income for many different and very important things, such as paying the rent or the mortgage, buying food, buying clothing, paying the bills, funding kids' education, paying off debts, and more.

Given how reliant the majority of us are when it comes to our regular income, it is important to consider what would happen if that income was suddenly taken away. Many people are guilty of taking their job or source of income for granted to some degree – and it comes as a huge shock to the system if this income is suddenly no longer available for whatever reason. This is why everyone – no matter how secure they think their income is – should take the time to consider how they can protect themselves from the financial repercussions of losing their income.

Compare income protection quotes from these direct brands

Name Product Short Description Maximum Monthly Benefit Maximum % of Income Covered Maximum Benefit Period Waiting Period
Protect your lifestyle with Virgin Income Protection and new eligible customers can earn 25,000 Velocity Points. Ends 31 Aug 2018. Min monthly premium and T&Cs apply.
5 years
14, 28, 60, or 90 days
Join Qantas Income Protection and earn up to 100,000 Qantas points. T&CS apply.
5 years
2, 4, 13 weeks or 2 years
Cover up to 75% (to a maximum of $25,000) of your monthly income with NobleOak Income Protection. Benefit period can be tailored to suit your needs.
2 years or to the age of 65
30 or 90 days
Cover up to 75% of your monthly income if you can’t work due to illness or injury, up to a maximum of $10,000 a month. Take out cover today and you could get a bonus $100 Gift Card.
5 years
30 or 90 days
Receive up to 75% of your income (up to $10,000 per month) if you're unable to work due to serious illness or injury.
5 years
30 or 90 days

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Income that we tend to rely on get end up being taken from us for a range of reasons, which includes:

  • Redundancy
  • Sickness and injury, which stops us from working and earning
  • Disability and trauma, which can stop us from working and earning

Receive financial support with these insurance covers

There are a number of different insurance products on the market that are designed to help protect you to some degree against the effects of loss of income. You could end up losing income for a variety of reasons and you will most likely find something on the market that can help to provide financial protection to varying degrees. Of course, it isn't practical or affordable for most people to consider taking out all the different types of cover but you should familiarise yourself with the different options and choose the products that you feel will be most beneficial to you. Some of the insurance products that provide financial protection in the event that you lose your income include:

  • Mortgage insurance: This type of cover is offered by – and sometimes insisted upon – many mortgage providers. For most people, a large chunk of their income goes on paying the mortgages. If you were to lose your job through redundancy or were unable to work through sickness or injury, you could risk losing the roof from over your head if you can no longer afford the mortgage repayments due to having no income. With mortgage insurance you can ensure that your repayments are met each month in the event that you are not able to work and earn your wage (based on terms and conditions), which means you won't have the added worry of possibly losing your home on top of everything else
  • Income protection cover: Although mortgage insurance is great for ensuring that you do not end up falling into arrears with your mortgage, there are other issues at hand if you lose your income. For example, how will you pay your bills, put food on the table, and pay for other day to day essentials? Your mortgage insurance won't cover this. However, with income protection insurance you can receive up to 75% of your regular income in the event that you are unable to work and earn due to sickness or injury, which gives you time to get back on your feet without worrying about your finances.
  • Bill protection insurance: is a type of cover that provides you with monthly benefit payments so that you can keep on top of your bills when you are ill, injured or have been made redundant. You can nominate the amount of cover that you require, giving you a peace of mind while you are still recovering or looking for new employment.
  • Disability and trauma insurance: You will also find insurance cover to protect your earnings in the event that you cannot work due to disability. Again, this cover provides you with peace of mind and helps to ensure that you are not left worrying about finances at a time when you will have plenty of other things to deal with. Similarly, trauma insurance provides protection in the event of different levels and types of debilitating trauma.

How does bill relief work?

Regardless of whether you're a high, or a low, income earner you'll still have bills to pay despite what you earn. If the bills don't get paid for some reason that's out of your control it won't take long before financial trouble starts heading your way and your creditors start demanding full payment, or else.

If you were temporarily disabled because of sickness, redundancy, or injury and your earning capacity was affected as a result, how long do you think you would have before financial disaster struck? Well, it need not be a problem, that's if you've had the foresight to insure yourself for Bill Relief. You can ensure that all your bills will continue to get paid for a period of your choosing for up to six, 12, or 24 months for injury or sickness causes and up to three months if you've been made redundant. The benefits from such a cover also give you:

  • Guaranteed cover for all Australians aged between 18 and 60 years of age (subject to your health conditions during the previous three years)
  • No medical or blood test
  • Premiums are usually tax deductible.

Bill Relief will pay up to $3,000 in cash every month, you're able to spend it how you wish and it will make certain your household bill get paid no matter what's happening regarding your earning capacity.

Things to consider with Insurance to protect loss of income

When you are looking for any of these different types of insurance there are a number of things that you need to consider. This includes the fact that you will need to compare different plans due to variations in:

  • The cost of premiums, which can vary based on the plan and the provider you choose for your cover
  • The maximum insurance coverage levels, which will also vary based on the plan and provider you choose
  • The benefit periods offered on the plans you are considering – you will usually have a choice of benefit periods and can choose the one that suits your needs and budget
  • Terms and conditions, which will enable you to see what you are and are not covered for

William Eve

Will is a personal finance writer for finder.com.au specialising in content on insurance. While he cannot give personal advice to clients, Will enjoys explaining the intricacies of different types of protective cover to help individuals and businesses find affordable cover that won't leave them underinsured.

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