Income Protection Insurance Quotes

Income protection helps protect you from loss of income due to sickness or injury so you and your family won’t lose everything you’ve worked so hard for. Don’t risk being over or under-insured. Protect your financial future by regularly reviewing your policy and comparing quotes online. Compare income protection insurance quotes to match your personal needs and budget with the policy options.

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Since the overwhelming majority of people have little understanding of how to compare income protection policies, the fact that you’re reading this article puts you ahead of your peers.

In this guide, specifically written for first-time income protection buyers and those reviewing their policies, you’ll discover:

What is income protection?

Income protection is a type of insurance that provides you with income certainty in the event that you are unable to work for a specific period of time, due to illness or injury. It protects your financial future by providing a regular monthly payment, generally paying up to 75% of your monthly salary, for a specific period.

If you depend on your salary to pay your household bills or to support your family and find yourself suddenly sick and unable to work, income protection insurance kicks in to provide you with a portion of the taxable income you would have earned had you been working.

You can’t predict the future, accidents and illnesses can happen at any time. By protecting your income you have the assurance that you and your family will be taken care of and you can focus on your recuperation.

There are 3 main types of income protection policies in Australia

number-1Indemnity Value

Your monthly benefit will be based on the lesser of the sum insured or your pre-disablement income which is the income you were earning prior to the claim. If you’re unable to provide relevant financial proof, you risk receiving a lower payout.

number-2Agreed Value

Your monthly benefit is determined by the financials you provided when you apply for the policy. Generally, you’ll be required to provide proof of income at this stage for the two years prior to your policy inception. This policy type might be best suited to people with fluctuating incomes.

number-3Guaranteed Agreed Value

This policy type essentially works the same way as an agreed value policy, but select insurers use this terminology to “convert” your agreed value policy to a Guaranteed agreed value upon presenting your proof of income. To receive such a policy you must present your financial statements at application stage and the insurer has to verify it.

Compare the pros and cons of agreed value vs indemnity income protection before choosing your income protection policy type.

What does income protection cover?

Income protection generally covers you if you suffer an illness, for example, a stroke, or an accident which has left you partially or totally disabled and unable to work in your own or any occupation, for longer than the waiting period. You’ll usually receive a monthly benefit payment of up to 75% of your pre-tax income or sum insured.

While all policies differ, income protection usually covers sicknesses and injuries that keep you off work for longer than your waiting period.

What doesn’t it cover?

The product disclosure statement (PDS) of the policy you’re considering will provide details of all the terms and conditions for which a claim will not be paid out. For example, some insurers will not pay a claim if the claimable event was due to intentional self-inflicted injuries or because you participated in a criminal activity at the time you suffered the injury.

Take note: If you accidentally or deliberately do not disclose something important when applying for a policy, for example, that you’ve undergone some type surgery, then your claim might not be valid. It is extremely important that you fully disclose all information pertaining to the questions being asked.

How much does income protection cost?

The cost of your income protection policy is dependent on several factors, like your age, gender and insurable income. The premiums you pay will also be determined by the options you choose in your policy, for example, the waiting and benefit period, as well as any built-in benefits or additional option you want to be added.

  • Your age
  • Your gender
  • Your insurable income
  • Your smoking status
  • Your occupation
  • The State you reside in

Income Protection Compare Tool

  • Premium Types
  • Frequency of premium payments

Income Protection Compare Tool

Premium Types for comparison:

There are generally three premium types offered:

number-1Stepped premiums:

Generally start off cheaper than level premiums, increase as you get older.

number-2Level premiums:

More affordable in the long run because level premiums do not increase with your age each year. However, they do start off higher than stepped premiums.

number-3Optimum/Hybrid premiums:

Select insurers offer this premium style which begins as stepped but converts to level style premium once the stepped premiums become more expensive than the level premiums. Generally, your premiums will remain at a “level style” for a predetermined time e.g. 10 years then convert back to stepped premiums.

The cost of your income protection premium will also be influenced by your choice of:

  • Waiting Period
  • Benefit Periods
  • Monthly Benefit (Sum Insured)
  • Additional options

Waiting Period

The waiting period is the amount of time you will be required to wait before you can start to accrue monthly benefits. Select insurers will require you to be continually disabled for this entire period.

Waiting period options will differ between insurers but you will generally have a choice between 14, 30, 60, 90, 180 days or 1 year or 2 years.

The length of your waiting period will affect your policy premium. Policies with longer waiting periods will generally be less expensive while policies with shorter waiting periods will usually cost more.

Benefit Period

The benefit period is the maximum period during which the insurer will pay your monthly benefit. While this period differs from insurer to insurer, you will generally have a choice of benefit period of either 2, 5 years or 6 years to age 55, 60, 65 or 70.

Take note: The longer your benefit period, the more expensive your premium becomes because of the increase in liability to the life insurance company.

Monthly Benefit

The monthly benefit is the maximum amount you will receive each month calculated on 75% of your taxable earnings. The monthly benefit is unique to income protection insurance in that it is not paid as one lump sum as with the majority of other types of personal insurance.

However, your payout will usually not exceed 75% of your earnings over the previous 12 months and may also be affected if you receive payments from other insurers.

The monthly benefit will expire at the earliest of:

  • The end of the benefit period
  • The expiry of the policy
  • The insured being able to return to work
  • The insured’s death

Additional options

You can further customise your policy with additional policy options. Some insurers may include some of these options or benefits in their standard income protection policies, but it is important to check.

Additional options which may affect your quote include:

  • Specified injury benefit
  • Day 1 Accident cover
  • Increasing Claims Option
  • Total Disablement Booster Payment
  • Needlestick cover
  • Bed confinement option
  • Lump sum payment option
  • Business expenses

Generally the more additional paid for options you include in your policy, the more expensive your policy will be.

How much income protection do I need?

The amount of income protection cover you need depends on your specific requirements and whether you have other people, like your spouse and kids or elderly parents, relying on your salary. If you were unexpectedly unable to work and had no way of paying the bills, you probably need a higher level of cover. Especially when you are self-employed and may have no sick leave to fall back on.

Seeing as you’ll generally only receive 75% of your income if you’re sick or injured and unable to work, you need to calculate what amount of money will be enough to pay for medical expenses, monthly mortgage payments or car loans, and day-to-day living expenses.

To determine the right amount of cover you might need, you’ll have to take a few things into consideration:

  • Monthly benefit: We all have different needs. If you’re single and don’t have any long-term debt you might not need 75% of your income covered and thus request a reduction your cover amount.
  • Waiting period: You can calculate your preferred waiting period after taking into consideration your sick leave entitlements or savings potentially reducing your premiums.
  • Benefit period: How long you would need your income to last for, for example, if you are retiring in 2 years you may only need a 2-year.

How to compare income protection insurance in Australia

Start comparing income protection quotes to discover which company, price and terms offered are best suited your unique requirements. Income protection life insurance quotes can vary widely depending on who you choose to purchase from and the options you pick.

Compare what is actually covered by the policies being considered

Each insurer will provide different coverage, therefore it is important to compare the basics being offered and then the built-in policy benefits to see which will provide you with the best value based on your requirements.

Step 1. Compare the monthly benefit

Are you comparing the same monthly benefit between the policies you are considering, as this will have a big impact on any potential claim payment.

Step 2. Compare benefit periods

Compare how long you’ll be receiving the benefit payment for (2, 5 years or 6 years to age 55, 60, 65 or 70) and if the choices available match your needs.

Step 3. Compare waiting periods

Choose an insurer that offers the waiting period you prefer, i.e. the period of time (14, 30, 60, 90, 180 days or 1 year or 2 years) you have to wait before you can make a claim.

Step 4. Compare insurers’ classification of a disability

Different insurers will classify disabilities as either partial or total and permanent in relation to you not being able to perform the duties of your own occupation or any occupation. The exact definition should be carefully considered before applying for a policy as this can have a major impact on your ability to potentially lodge a successful claim.

Step 5. Compare the built-in benefits offered

A number of built-in benefits will generally be available with your policy, however, this will differ depending on which benefits are included as part of the insurer’s standard policies.

Standard built-in benefits may include:

  • Waiver of premium option
  • No claim benefit
  • Total/partial disablement benefit
  • Rehabilitation expenses benefit
  • Specified injury benefit

Please consult the relevant PDS to see which built-in benefits are included in your policy so that you choose the most appropriate policy for your budget and specific requirements.

List of income protection insurance policies we compare

  • AIA Priority Protection
  • AMP Elevate Income Insurance Plan
  • Asteron Life Complete Income Protection
  • BT Protection Plans
  • Clearview Life Solutions Income Protection
  • CommInsure Income Care
  • MLC Income Protection Insurance
  • OnePath OneCare Income Secure
  • TAL Accelerated Protection
  • Zurich Wealth Protection Income Protector

Below is an example of what a comparison for a 35-year-old non-smoking male might look like.

Income Protection Compare Tool

Get your income protection insurance quotes online

You can start comparing quotes instantly using our online quote tool. Our revolutionary and transparent side-by-side comparison will show you the best quotes for income protection available in Australia.

1. Enter your details
Tell us about your income protection desires and what you’re looking for.

2. Compare companies
Compare income protection insurance from some of Australia’s top companies.

3. Customise your quote
Review your options and consider tailoring your quote to fit your needs.

There are a number of insurers to choose from, but not all of them provide the benefits you need to take care of your family and secure your financial future. We help you understand and navigate your insurance options. Give us a try by filling the quote form above.

Other ways you can protect your income

Group salary continuance

Also known as group income protection within a superannuation environment, this policy type is generally taken out by the Trustee of a superfund on behalf of its members.

Personal accident insurance

Provides a monthly benefit depending on your policy, should you be unable to work due to an accident, which keeps you off work for longer than the waiting period.

Frequently asked questions and answers

Why can’t I get 100% of my income covered?

If you got 100% of your income covered under an insurance policy, you would probably have less incentive to want to work. By providing 75% of your income, you will be more likely to return to work.

Can income protection be paid from super?

Yes, you can hold your policy inside super, but this can sometimes result in added complications because of superannuation regulations, for example having to meet the insurer’s definition of a claimable event, as well as the SIS legislation condition of release before benefits, are paid into your personal bank account.

You’ll also generally be missing out on some built-in features, for example, the rehabilitation benefit and accommodation benefit.

Do I pay GST on income protection insurance?

There is no General Sales Tax (GST) on income protection insurance premiums because it is classified as a financial service. GST is included in general insurance like that of your home and car, but not for life insurance or private health insurance premiums.

Published: January 10, 2018
  • Income Protection Benefit Period

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

  • Income Protection Monthly Benefits Explained

    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

  • 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!

  • Best Income Protection Insurance

    3 Easy steps to finding the best income protection insurance Australia has to offer. Becoming informed is the first step, we unveil the 3 easy steps for you

  • Policy Types

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

Ask an Expert?

4 Comments

  • Norman Khan |

    Dear Expert

    I am an expat working in Indonesia and interested in obtaining income protection plan. Apart from what I have read the questions I have is:

    1. Does it cover Australians working overseas?
    2. Does it cover if you have lost your job not due to sickness or accident. For example termination due to budgetary reasons, etc.

    I will further read the website information but appreciate your reply.

    Regards
    Norman Khan

    • SPECIALIST
      Brett Lenertz |

      Hi Norman

      Thank you for your questions.

      Generally speaking the income protection policies we have available to us do not offer any form of redundancy cover, they will only cover your for sicknesses and accidents that keep you off work.

      Your question in relation to expats living abroad is very timely as there have been a number of changes that we have observed made by insurers around their eligibility criteria, I have therefore prepare an updated response to your question about Australian expats living abroad looking for life insurance or income protection in our ask an expert section.
      I hope you find the answer valuable!

  • teresa |

    On a salary of approx. $75,000 what would you pay age 58 female, non smoker, sales support

    • SPECIALIST
      Mark Anderson |

      Hi Teresa,

      Thank you for the enquiry. There are a number of variables that influence the cost of your insurance premium. However, here is an Income Protection quote for a 58 year old female non-smoker working in sales support earning $75,000 based in NSW. $3,228/year or $291.22/month based on the above details.

      If you would like a detailed comparison quote based on your exact details please reach out to the team on 1300 135 205. We also have a Lowest Price Guarantee.

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