The Cost of Income Protection

Information verified correct on October 27th, 2016

How much does income protection cost per month in Australia?

We analysed the monthly cost of an income protection policy for a 35 year old and found what percentage of their monthly income goes towards the premium:

Monthly incomeMonthly cost for maleMonthly cost for femalesProportion of income (M/F)
$4,000 $61.91$92.231.55%/2.31%

Monthly cost is based on the average cost of premiums available through's quote engine.

Compare the cost of income protection brands below

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Details Features
Income Protection
Income Protection
Cover up to 85% of your income up to $10,000 per month if you can't work due to sickness or injury. Cover for over 1,000 jobs and full-time, part-time and self-employed.
  • Monthly benefit up to $10,000
  • Cover for applicants up to age 60
  • 30 day cooling-off period
Go to site More info
Income Protection
Income Protection
Receive up to 75% of your income each month to a maximum of $25,000 if you can't work due to serious illness or injury.
  • Monthly benefit up to $25,000
  • Available for applicants up to 59 years old
  • 21 day cooling off period
Go to site More info

What factors influence my income protection premium?

What you pay for income protection is based on a number of factors used by insurers to determine the level of risk you carry. These include:

  • 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 such as heart problems and pregnancy complications.
  • Whether you smoke: You may pay as much as 50% more for income protection insurance if you are a smoker. You can have your premiums changed to reflect non-smoker status if you have not smoked for 24 months.
  • Pre-existing medical conditions you have: An insurer will need to know the nature of your condition and any current treatment you are currently receiving. 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 the actual duties carried out on your occupation and their perceived level of risk.
  • Lifestyle factors: Potentially dangerous hobbies such as dirt bike riding or hang-gliding may result in an increase of the premium.
  • The waiting period you choose: A shorter waiting period will result in a higher premium.
  • Benefit period you choose. The longer your benefit period the higher the premium.
  • How often you pay your premium: Paying your premium annually as oppose to monthly will usually bring a discount.

Here's how your occupation can influence the cost of income protection

Income**Average monthly premium*
Retail Supervisor$4,000$92.51
Specialist Medical Practitioner$15,000$220.54
Registered Nurse$4,000$138.34
Machinist (Metal or Wood)$4,000$154.57
Building Industry, Supervisor$4,000$115.73

*Average monthly premium is based on the average premium of all policies available in finder's quote engine for both males and females. Quotes are based on non-smoking 35 year old in in NSW. Income levels are for illustrative purposes and not as a definitive guide.

How can I get cheap income protection that still provides enough cover?

While it’s important to ensure you have adequate cover when you take out Income Protection Insurance, there are still ways you can save money and reduce the cost of your premium.

  • 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
  • Take out a joint policy with your partner and receive a multi-policy discount
  • 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
  • You can reduce the overall cost of Income Protection by combining it with other benefits such as TPD cover in a life insurance package
  • Already got cover? It could be worth reviewing your current cover to see if there is a more suitable option available to you

How do stepped and level premiums work? What's right for you?

When you take out a life insurance or income protection policy, you have the option to structure your premium repayments as either stepped or level.

  • Stepped 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 - 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.
Increase over time (%)27.78%0%10.53%

*Figures above are a rough estimate for illustrative purposes and should not be used as an indicator for cover.

So what type of premium should I choose for my situation?

Stepped premiums can be a good option if you are looking for a cost-effective option in the early years of your policy if you are on a tighter budget for cover. It's also more suitable if you are likely to change your policy in the future.

Level premiums could be a better choice if you are confident that your financial situation won't see too much change in the years ahead and that you are likely to stay with the same policy.

How do waiting periods work?

The waiting period is the period between the time you make the claim and are unable to work and the time you receive your benefit payout.

You can usually choose a waiting period of 14, 30, 60, 90 days, 1 year or 2 years

The shorter waiting periods usually correlate to a higher premium, as you are asking the insurer to pay your benefits sooner, however, if you have savings which can help you make ends meet for a few weeks or months, or sick leave you can use, you may want to opt for a longer waiting period to make some savings each month. In other cases, your insurer may also include an accident benefit, where the waiting period is waived if you are unable to work due to an accident.

Typical payment waiting period payment cycle:



Day 1Claim lodged by policyholder following onset of disability and stops work.
Day 30Waiting period stops.
Day 60First benefit payment given to policyholder.

How do benefit periods work?

When you apply for coverage you will also be able to choose how long you want to receive the benefit payout for. Often you can choose from a benefit period of one, two or five years for example, or you can choose to receive your benefit up to a certain age, such as 60 or 65 years old. Again, the benefit period you choose can affect the cost of your premiums, as the longer the benefit period, the higher the premium.

Benefit Period

Renewal to Policy Anniversary Preceding Age

2 Years65
5 Years65
To Age 6060
To Age 6565
To Age 7065

Maurice Thach

Maurice is a publisher for Daily research of Australia's insurance offerings allows him to breakthrough the noise of the many policies out there to uncover what can (and can't) be covered. Maurice hopes to make finding the right insurance easier for all.

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