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How Much Does Income Protection Cost?

Find out how much income protection costs (per month) in Australia.

We calculated the monthly cost of an income protection insurance policy for a 35 year old and uncovered what percentage of their monthly income goes towards the premium. Depending on factors such as your sex, how much cover you have, income protection can cost 1-3% of your monthly income.
Monthly incomeMonthly cost for maleProportion of incomeMonthly cost for femalesProportion of income
$2,000$30.051.44%$43.562.09%
$4,000 $53.381.28%$79.421.91%
$6,000$73.861.18%$110.811.77%
$8,000$90.181.14%$130.771.14%

Monthly cost is based on the average cost of premiums available through finder.com.au's quote engine. Prices last checked on October 2018 and are subject to change.

Get an affordable quote for income protection insurance

Name Product Short Description Maximum Monthly Benefit Maximum % of Income Covered Maximum Benefit Period Waiting Period
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 1,000 job types - full-time, part-time and self-employed.

$10,000
85%
5 years
14, 28, 60, 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.
$10,000
75%
5 years
30 or 90 days
Go into the draw to win (1 of 10) $1,000 eftpos gift cards when you get a quote for Medibank Income Protection. T’s and C’s apply.
$7,500
75%
5 years
30 or 90 days
Cover up to 75% (to a maximum of $30,000) of your monthly income with NobleOak Income Protection. Plus, pay no premium for 2 months with combined cover. T&C's apply.
$30,000
75%
2 years or to the age of 65
30 or 90 days
Receive up to 30% off in your premiums if you’re in good health and meet BMI qualification tests. T’s and C’s apply.
$10,000
85%
24 months
14 or 28 days
Cover up to 75% (to a maximum of $10,000) of your monthly income with Guardian Income Protection.
$10,000
75%
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.
$10,000
75%
5 years
30 or 90 days
Cover up to 85% (to a maximum of $42,000) of your monthly income with Aspect Income Protection.
$42,000
85%
5 years
14, 30, 60 or 90 days
Join Qantas Income Protection and earn up to 150,000 Qantas points. T&CS apply including minimum premium and policy hold periods apply to earn points.
$12,000
75%
5 years
2, 4, 13 weeks or 2 years

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Sex
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We get speaking to someone you don't know on the phone isn't fun. Here's why it's worthwhile:

  • 100% free - there's no obligation to sign up
  • Can help you make sense of your policy e.g. how long you can cover you income for
  • Guide you through the application process correctly
  • Tailor a policy to your lifestyle and expenses (this can reduce the price you pay)

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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 and income can influence the cost of income protection

In the example below we take a look at various occupations with different income levels. As shown, 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.

Income**Average monthly premium*
Retail Supervisor$4,000$92.51
Doctor$12,000$185.10
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 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

Stepped and level premiums: What's the difference?

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.
YearSteppedLevelledHybrid
5$1800$2000$1900
10$1900$2000$2000
15$2000$2000$2100
20$2100$2000$2100
25$2200$2000$2100
30$2300$2000$2100
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

Stage

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
Lifetime65

Maurice Thach

An insurance researcher and writer for finder.com.au who loves finding an answer to the question "Am I covered for ________?" Maurice has also completed a Tier 1 Life Insurance and a Tier 2 General Insurance Certification under ASIC's Regulatory Guide 146. This means he can confidently provide general advice for life insurance and non-life insurance products.

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2 Responses

  1. Default Gravatar
    GavinSeptember 20, 2018

    What would it cost for income protection if I am sick,injury ect. To cover a rate of $250’000 annual gross wage.

    • finder Customer Care
      MauriceSeptember 20, 2018Staff

      Hi Gavin,

      Thanks for your question – this might vary based on a few factors like you’re lifestyle and nature of occupation. To get an estimate however, try this page. Simply click on the ‘Get prices online’ button.

      I hope this helps,

      Maurice

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