How much does income protection insurance cost?
The average income protection costs around $64 a month if you earn $5,000 – but other circumstances can impact the price you pay.
What is the average cost of income protection?
The prices and benefit payouts below are based on a 35-year-old, non-smoking accountant with no pre-existing conditions listed. Quotes checked across 4 brands in September 2022.
|Monthly income (Pre tax)||Average cost per month (male)||Average cost per month (female)||Monthly Payout Range|
|$14,000||$199.89||$231.92||$10,000 - $10,500|
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- Age: Premiums will increase with age because you are more likely to be susceptible to medical conditions.
- Your gender: Women are generally considered to be more susceptible to pre-existing medical conditions so pay more.
- Smoking status: You may pay as much as 50% more for income protection insurance if you are a smoker.
- Pre-existing medical conditions: There are conditions that will be excluded automatically and others that you may receive cover for if more information is provided.
- Your occupation and how dangerous it is: This will also depend on your actual duties – for example, blue collar workers typically pay more.
- Lifestyle factors: Potentially dangerous hobbies such as dirt bike riding may result in an increase of the premium.
- The waiting period you choose: A shorter waiting period (so you can get paid sooner) will result in a higher premium.
- Benefit period you choose. The longer your benefit period (the time you're paid for) the higher the premium.
How occupation and income can influence income protection costs
Both occupation AND income can affect the cost of cover. For example, a retail supervisor and a registered nurse who earn $4,000 a month will pay a different premium on income protection.
Likewise, a medical specialist may have a higher income to insure than a general doctor. This, along with the occupation category can mean a difference in premiums.
Stepped premiums will increase over time in line with your age. They are a more affordable option at the start of your policy but increase steadily overtime...particularly once you have reached 40 years of age.
Level premiums will start out higher than stepped but will remain the same for the life of the policy. Generally level premiums will end up being more affordable in the long run.
The graph below gives you an idea of how stepped and level premiums differ based on annual premuiums (on the left) and years (at the bottom). There is also a line for hybrid premiums – some insurers also offer this.
How can I get cheap income protection that still provides enough cover?
Here are a few ways you can save money and reduce the cost of your income protection.
- You can choose a longer waiting period such as 60 or 90 days before your benefit will start to be paid
- You can opt for a shorter benefit period (the length of time your claim will be paid out for)
- You can choose to be paid only up until age 60 instead of 65
- Pre-pay your benefits up to 12 months to receive tax deduction for the current financial year, while receiving the benefit for the next financial year
Why you can trust Finder's income protection experts
You pay the same as buying directly from the insurer. We make money from referral fees when you choose a policy, but you don't pay any extra.
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Since 2016, we've helped thousands of Australians find income protection by explaining your cover options, simply and clearly.
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