Income Protection Calculator

When you are going through a quote comparison, you will need to decide how much cover you want.

While generally income protection only covers up to 75 per cent of your salary, you still need to consider if it is the amount you want, or if you want less cover. Using our income protection insurance calculator steps and guide is a fantastic starting point.

Our Guide will take you through:

  1. What you need to consider
  2. The monthly benefit
  3. Waiting and Benefit Periods
  4. Savings and other entitlements
  5. Your partner

What you need to consider:

Our clients generally find that they need to consider the following when calculating the level of income protection required:

  • Mortgage or rental repayments
  • Other debts
  • Ongoing daily expenses
  • Educational Expenses for your children (school/university fees)
  • Affordability

Once these obligations and expenses are considered, you can have a more accurate idea of the level of income or the monthly benefit you need, how long you need it for (benefit period) and how soon you need it (waiting period).

The Monthly Benefit:

Generally, cover is available for up to 75% of your salary to encourage you to go back to work as soon as you possibly can. Even if you have two policies, you will generally never receive more than 75% of your salary.

However if you need more than 75% of your income covered, select insurers offer a number of policy options which can increase your monthly benefit above 75%:

  • Select insurers may offer a booster option if you have an income protection policy and you suffer from a critical illness. The booster option can increase your monthly benefit by up to 1/3 for a period of time – generally up to 24 months.
  • If you have been paid a claim for more than six consecutive months after your waiting period and you are still totally disabled and unable to perform at least two of the Activities of Daily Living, select insurers will pay an additional 1/3 of your monthly benefit until the end of your benefit period.

In order to receive the additional 1/3, you must continue to be totally disabled and unable to perform at least two of the Activities of Daily Living.

  • Select insurers may offer an option where you can insure up to 80% of your salary. The additional 5% will go towards either your mortgage if at least 5% of your pre-claim monthly earnings go towards paying a mortgage or towards superannuation if at least 5% of your pre-claim monthly earnings goes towards your superannuation. This additional five per cent is generally payable for a maximum of two years.

When would I start receiving my Benefit?

When you start receiving your benefit will depend on your Waiting Period– this is the amount of time you need to wait before you start accruing your monthly benefit.

How long do I receive the benefit for?

The length of time you receive your benefit for is called your Benefit Period. Insurers generally offer a number of benefit period options for you to choose from.

How long you choose to wait to receive your benefit and how long you wish to receive your benefit may be dependent on:

Your savings and other entitlements

It is important to consider what level of savings and leave entitlements you have as this may impact on your decision on how long you are able to wait and how long you need to receive your benefit for.

Your partner

The amount of money your partner earns may need to be considered when you are deciding on your waiting period and benefit periods. It may also be important to consider insuring both you and your partner, even if they are not working.

You may also want to read:

Our extensive guides on Income Protection
Policy Options worth considering

Published: September 6, 2013

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