Best Income Protection Insurance

Trying to decide which policy will provide you with the most benefits and value? You’ve come to the right place.

Our guide provides you step-by-step assistance in finding the best income protection insurance in Australia. Helping you invest in the best policy for your specific needs and occupational circumstances. Whether you’re employed full time, self-employed or a professional, for example, a Doctor, surgeon or architect we’ve thought of everything.

Compare Income Protection Quotes

Free Online Comparison Free Online Comparison
Lowest Price Guarantee Lowest Price Guarantee*
No Hidden Fees No Hidden Fees
Calculating your quotes

Recent Income Protection Awards

The Australian Financial Review (AFR) Blue Ribbon awards reviewed and awarded insurers for their income protection policies.

In 2016 Clearview Life Solutions took home the blue ribbon with their Income Protection Plus policy, paying policyholders an ongoing monthly benefit amount for as long as they remained disabled or until the expiry of their benefit period.

This year, the coveted blue ribbon went to BT’s Income Protection Plus Plan, other finalists for the 2017 award included AMP Elevate’s Income Insurance Premier Plan and TAL for their Income Protection Premier Plan.

Should Awards determine the best value income protection insurance?

No, because the determining criteria to enter such a competition and determine the winners are often not made available or clearly explained, therefore we should not use these awards as the sole determining factor in make a product decision..

Finding the best value income protection insurance is an important step in protecting you and your family’s financial future. When considering which Income protection policy is best for you, ask yourself which policy provides you with the best value for your needs, including:

  • What exactly will it cover me for and for how long?
  • How much will it pay out?
  • How easy is the policy to claim on compared to others?
  • Does it protect me from being unable to perform my own occupation or is it specific to any occupation?
  • How do the built in features compare with other policies on the market?
  • Are there any enhancements I can make with policy options to help me better tailor the policy to my needs?

Finding the right income protection cover

You can determine who has the best income protection insurance for you by following our three step guide.

  1. Consider your present and short term financial situation,
  2. Work out your monthly income requirements and your long term family obligations and
  3. Understand the policy types, premium structures, policy options and factors that influence the cost of your cover.

You could experience a large drop in income if a sickness or injury results in you missing work for a prolonged period. Income protection is designed to support you and your family during such times.

Here’s how to choose the best Income Protection Policy for your situation.

Step 1. Consider your present and short term financial situation

How much sick leave do you have?

Sick leave helps an employee when their ill or injured and needs time off to recuperate. Usually, full-time employees are provided with 10 days sick leave each year, while pro rata is determined for part-time employees based on the amount of hours they work.

Of course, if you are self-employed and or an independent contractor, you may not have any sick leave and should make sure you have money set aside in the event of sickness or injury, which brings us to our next point.

How much savings do you have?

Knowing the amount of money you’ve got saved will help you determine how soon you’ll need the benefits to start should you be unable to work due to an illness or injury.

Generally, the less savings and sick leave you have the shorter the waiting period on the policy will need to be. Because you never receive any money during the waiting period you need to ensure you can financially survive the waiting period. Take note that a 90 day waiting period can reduce your premiums by half compared to a 30 day waiting period.

Step 2. Work out your monthly income requirements and your long term family obligations

Determine the level of cover you’ll need.

What is the amount of income you and your family requires to maintain the lifestyle you’re accustomed to? This is referred to as your monthly benefit and replaces part of your income. The best income protection policy will at least provide cover for up to 75% of your personal exertion income. However, you might need more than 75% to help you maintain your current lifestyle. Select insurers offer a number of policy options which can increase your monthly benefit above 75%. See point 3.3 for built-in and add-on features.

Determine your benefit period.

Even though there is no way for you to know how long you might one day be ill or injured, it’s important to estimate how long you’ll require the monthly benefit to continue should you have a long term sickness or accident.

Do you have any TPD / Trauma cover?

When calculating the monthly benefit or benefit period you’ll need it’s important that you review any other insurance cover you might have as this may alter your cover requirements. While neither is a substitute for income protection, you may be able to reduce the level of TPD or Trauma cover you need or alternatively the level of cover your income protection policy provides.

Generally, your monthly benefit will have an offset clause, which means that if you were to receive a lump sum pay out, for example, a workers comp claim for the same condition, your monthly benefit would be reduced by the relevant calculation as stated in the product disclosure statement. Typically it is reduced by 1/60th of the lump sum payout. Or if you had a second income protection or salary continuance policy that provided a monthly benefit then the max they would pay you is up to 75% of your pre-disablement income, that’s because you should never be better off disabled than able to work. Otherwise, you’ll have no motivation to return to work when you’ve recovered.

However, you can have two policies if they cover different benefit periods. For example, one policy might require a 30 day waiting period and only provide two years of income benefit; your second policy might require a two-year waiting period but will provide cover until your age 65.

Step 3. Understand the policy types, premium structures, policy options and factors that influence the cost of your cover

The three types of policies you can choose from:

Indemnity: Generally this is the cheapest type, however this is because you monthly benefit is determined by your ability to prove your “Pre Disablement Income” at claim time and your payout will be the lesser of the sum insured or 75% of your “Pre Disablement Income”, and the responsibility is on you to prove what you earned.

Agreed Value: Claim payout will be determined at application stage by your average income was when you applied for the policy. Your monthly benefit remains fixed and will not reduce if your income decreases.

Guaranteed Agreed Value: This is a term used by select insurers to validate that your financials has been received and approved, thus ensuring your Agreed value policy will pay out the monthly benefit as stated.

Premium structures currently available include:

Stepped premiums: Stepped premiums are more affordable at the beginning but become more expensive with each passing year.

Level premiums: Level premiums start off higher but do not increase due to your age, thus are more affordable in the long-term.

Hybrid premiums: Hybrid premiums are a mix of both stepped and level premiums, starting off higher than normal stepped premiums and then converting to level style premium at a pre-determined time.

Built-in vs. Optional additional features:

Carefully read through the policy disclosure statement (PDS) of the income protection policies you’re considering and see if it can be enhanced or adapted to provide more coverage. For example, you can choose to receive a lump-sum benefit option from certain insurers, if you do not have a TPD policy.

Here are two more examples of people who might require something extra before a policy is considered ‘the best’.

Factors that will influence the cost of your policy include:

  • Your age when you take out the policy.
  • How long you want the cover for – benefit period.
  • Your chosen waiting period – how long you’ll have to wait before your monthly benefit
  • How good your general health is at application
  • Whether you’re a smoker or not.
  • The level of cover you’re applying for.
  • Your occupation – how dangerous it is deemed.
  • Premium structure selected.
  • Type of policy selected.

Best income protection insurance for doctors

The best income protection insurance for doctors would be a policy that either includes or has the option to add Needle stick Cover and provides a monthly benefit of up to 75% of their income in the form of a monthly benefit should they be unable to perform their own occupation due to the sickness or accident.

Best income protection insurance for self employed

The best income protection insurance for self employed people are the ones you’re able to tailor to your specific circumstances and occupation. You might need a more affordable cover option with a shorter benefit period for accidents or a policy which provides more flexibility when needing to prove your level of income.

Whether employed full time, self-employed or a professional, make sure you invest in the best value income protection insurance for your specific circumstances. Contact us and let us help you find an appropriate policy to protect you and your family’s financial needs.

Published: June 16, 2017
  • Income Protection Insurance Waiting Periods

    Short waiting periods ensure your benefits are paid sooner but premiums cost less with longer wait periods. Compare waiting period options & costs online.

  • Agreed Value vs. Indemnity Income Protection

    Comparing an Agreed or Indemnity Value income protection is an important consideration. We detail the pros and cons of each, to help you find the best!

  • Benefit Periods

    Benefit Period options, commencement dates and the affect on your income protection premiums is a very important consideration before selecting a policy

  • Policy Types

    Comprehensive comparison of agreed value vs. indemnity value income protection policies plus who they suit and how you prove your income

  • Monthly Benefits

    Your monthly benefit will cover up to 75% of your income! However select policy options such as claim indexation, super booster, mortgage booster enable you to increase this further

  • Income Protection Calculator

    Use our income protection insurance calculator to calculate how much of your income you can insure and what options are available to you.

Ask an Expert?

Share This