A Guide to Income Protection Insurance Quote Comparison
By comparing income protection quotes, you can dive deep into the policy you’re considering. You’ll be able to scrutinize its coverage, premium types, waiting periods, benefit periods, and additional options with ease. Don’t settle for less, make an informed decision today.
Published June 22, 2023
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Understanding Income Protection Insurance
Income protection insurance is a valuable form of coverage that provides financial stability and income certainty if you cannot work due to illness or injury for longer than your waiting period. Its purpose is to protect your financial future by offering a regular monthly payment, typically up to 70% of your monthly salary, for a specific period as determined in your Policy Disclosure Statement (PDS).
What does income protection cover?
Income protection insurance generally covers you if you experience an illness or an accident that leaves you unable to work in your occupation or any occupation longer than the waiting period specified in your policy. Therefore, it is essential to carefully review and compare different insurance providers and their specific offerings to find a policy that aligns with your requirements and preferences.
Factors to Consider When Comparing Quotes
When comparing quotes for income protection insurance, there are several key factors to consider. These factors will help you determine the suitability of a policy for your needs:
- Monthly benefit: Examine the monthly benefit amount provided by each policy. The monthly benefit refers to the percentage of your pre disablement income or maximum sum insured that you would receive as a benefit payment if you cannot work due to illness or injury.
- Benefit period: Consider the duration of the benefit period offered by each policy, which is the maximum time you would receive the monthly benefit if you remain unable to work. Common benefit periods range from two, five years and to age 65.
- Waiting period: Your waiting period is the time you must wait after becoming unable to work before you can start receiving the monthly benefit. Waiting periods typically range from 30 days to 90 days or more.
- Insurer’s classification of disability: Understand how each insurer defines and classifies disability. This determines the criteria you must meet to qualify for the monthly benefit. Familiarise yourself with the specific definitions and conditions outlined by each insurer.
Premium Types to Compare
In addition to coverage considerations, it’s essential to compare different premium types insurers offer. Premiums are the payments you make to maintain your income protection insurance policy. Here are two common premium types to consider:
- Stepped premiums: Stepped premiums start at a lower cost initially and increase over time as you age. These premiums can be affordable in the early stages of your policy but may become more expensive as you get older.
- Level premiums: Level premiums are more consistent as they are based on your entry age providing a more predictable premium and long typically long term savings in costs.
Additional Paid Add Benefits
Income protection benefits are an essential safety net for individuals who may be unable to work due to illness or injury. These paid options provide you with a way to further customise your policy to provide additional financial support to help cover living expenses while you’re unable to earn an income.
Short Waiting Period for Accidental Injury and Critical Illness Option
The Short Waiting Period is a feature of certain income protection policies (generally where 14 or 30-day Waiting Periods apply) that allows you to receive benefits during the Waiting Period if you are Totally Disabled for at least three consecutive days due to either:
- An Accident (within 30 days of the Accident date), or
- A Critical Condition (or symptoms of a later diagnosed Critical Condition).
Typically, the insurer will pay 1/30th of the Monthly Benefit amount for each day of Total Disability during the Waiting Period, starting from the first day of your Total Disability and continuing until the earlier of:
- The end of the Waiting Period, or
- You are no longer Totally Disabled.
Take note: It’s important to refer to the covered Critical Illness Conditions definitions in your PDS. Certain exclusions apply during the initial 3 months of the insurance, and conditions must meet the definition as diagnosed by a Specialist and confirmed by a medical adviser appointed by your insurer.
Indexed Claim Benefit
To ensure that benefits maintain their value in the face of inflation, your Monthly Benefit and Earnings Before Disability will receive an annual increase, not surpassing the Maximum Income Protection Benefit. The annual percentage change in CPI determines the adjustments in CPI.
In cases where there is no increase in the consumer price index (CPI), the insurer typically would increase by a set % of between 3-5% to the benefit amount. This option ensures that the insured’s claim payments are potentially adjusted to account for fluctuations in the cost of living over time.
Super Guarantee Benefit Option
The Super Guarantee Benefit Option provides an additional benefit if you are eligible for Total Disability Benefit or Partial Disability Benefit and continue contributions to your superannuation (super) on your behalf. This benefit is paid directly into your nominated super fund.
The amount of the Super Guarantee Benefit is typically calculated by taking the lesser of two factors. Firstly, it is based on the Super Guarantee Benefit amount specified in your Policy Schedule. Secondly, it is determined by considering the average amount of super guarantee payments made to your fund over the 12 months prior to the onset of Disability, or during any other relevant period mentioned in the table below.
| Situation | Period that applies |
|---|---|
| More than a 10% decrease in super guarantee payments compared to the previous 12 months | 24 months prior to Disability |
| Worked more than 3 consecutive months but less than 12 months prior to Disability | Months actually worked in the 12 months prior to Disability |
| On unpaid employer-approved maternity leave, paternity leave, sabbatical, or study leave during the 12 months before Disability | 12 months prior to starting leave |
If you select the Super Guarantee Benefit Option and you are eligible to have contributions to super made on your behalf while receiving either a Total Disability Benefit or a Partial Disability Benefit, your insurer will typically pay a Super Guarantee Benefit into your nominated super fund. This benefit is paid in addition to the monthly disability benefit, but the combined Disability Benefit and Super Guarantee Benefit cannot typically exceed $30,000 / month.
Booster Option
If you choose to include the Booster Option in your policy and experience Total Disability or Partial Disability you may be eligible to receive the Booster Benefit, for a period of up to 6 months.
Calculating Your Booster Benefit
If you have opted for the Booster Option, the following adjustments will be made:
- The Booster Option amount that you applied for and got approved for will be added to your Monthly Benefit.
- Typically, 20% will be added to the percentage used in calculating your Income Replacement Ratio amount.
Unique Built-in Benefits
Regarding income protection policies, different insurers offer a range of unique built-in benefits that can add value to your coverage. These benefits are designed to provide additional protection and peace of mind.
- Needlestick Benefit: Medical professionals may be eligible for coverage up to $1 million for occupationally acquired Hepatitis B, C, or HIV. Refer to the relevant PDS for details.
- Recurrent Disablement benefit: Recurring Disability typically treats a recurrence of a sickness or accident within the first 6-12 months of returning to work as an extension of the previous one, subject to specific conditions. If the recurrence is considered a continuation, there is no additional waiting period, however the combined benefit period cannot exceed the policy’s limit.
- Benefit Indexation: In order to ensure that your sum insured remains in line with inflation, your monthly Benefit will be subject to an annual increase. Typically the greater of CPI or 3-5% depending on the insurer. This increase will not exceed the Maximum Income Protection Benefit.
- Rehabilitation Expenses: Typically provides financial support for individuals with disabilities. In general a third-party provider will be engaged to offer occupational rehabilitation services. These services may include covering the expenses related to rehabilitation courses, retraining programs, or getting specialized equipment that directly contributes to your ability to return to work.
- Salary Increase Benefit: Gives you the option to request a monthly benefit increase of up to 20% without the requirement of providing additional medical evidence after certain life changes within the qualifying periods. However, this increase is subject to the maximum insurable amount.
How to Compare Income Protection Quotes Online
Step 1: Provide the necessary information
You’ll need to provide some essential information to insurance providers to compare income protection quotes. Your age and gender are important factors that insurers consider when calculating premiums and assessing risk. You’ll also need to specify your state of residence, smoking status, desired cover amount, and occupation. These details help insurers determine the appropriate coverage options and premiums based on your circumstances.
Step 2: Compare the pricing of various income protection policies
Once you’ve provided the necessary information, it’s time to compare the pricing of different income protection policies. Obtain quotes from multiple insurers and carefully review the cost breakdowns for each policy. Pay attention to the premium amounts and any additional fees or charges associated with the coverage.
Consider your budget and financial capabilities when evaluating the pricing of each policy. Remember, the cheapest option may not always provide the comprehensive coverage you need, so balance affordability and adequate protection.
Step 3: Compare the features and benefits of various income protection policies
In addition to pricing, comparing the features and benefits of different income protection policies is crucial. Look beyond the cost and consider the following aspects:
- Built-in benefits: Regarding income protection policies, insurers offer varying built-in benefits. However, there are several common benefits that you can expect to find in most income protection policies. These benefits may include the recurrent disability benefit and benefit indexation.
- Additional paid benefits : Some policies may offer additional or optional benefits that enhance the coverage. Evaluate these extras, such as the Super Contribution Option.
Step 4: Look at Waiting periods and benefit periods
Compare the waiting periods (the time before you become eligible for benefits) and benefit periods (the duration of benefit payments) offered by each policy. Consider your financial stability and ability to withstand a waiting period when deciding.
Step 5: Review Exclusions and Limitations
Carefully review the policy’s exclusions and limitations to understand what circumstances may not be covered. Be aware of any pre-existing conditions or specific occupational exclusions that may affect your eligibility for benefits.
Other Ways to Protect Your Income
In addition to income protection insurance, there are other avenues you can explore to safeguard your income. These alternatives can provide additional layers of financial protection in case of unexpected events. Here are two options worth considering, typically not as comprehensive but worth considering if income protection is not available or doesn’t meet your requirements:
Group Salary Continuance
Many employers offer group salary continuance as part of their employee benefits package. This coverage provides a regular income stream if you cannot work due to illness or injury. Group salary continuance typically covers a portion of your salary for a predetermined period, offering some income security during your absence from work.
Personal Accident Insurance
Personal accident insurance is a type of coverage specifically designed to protect individuals in specific industries or occupations against accidents and their potential impact on your income. It provides financial support for accidental injuries, offering compensation for medical expenses, disability, or loss of income resulting from an accident.
Benefits of Using an Online Quote Tool
An online quote tool for comparing income protection insurance quotes offers numerous advantages. Here are some benefits you can enjoy:
- Convenience: Online quote tools allow you to compare multiple income protection insurance quotes from the comfort of your home or anywhere with internet access. It saves you time and eliminates needing in-person visits or phone calls to different insurance providers.
- Time Efficiency: With an online quote tool, you can obtain multiple quotes from various insurers within minutes.
- Comprehensive Comparison: Online tools enable you to compare quotes from top insurers side by side. You can easily assess the differences in coverage, benefits, premiums, waiting periods, and other important factors.
Frequently Asked Questions and Answers
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Who should consider getting income protection insurance?
Income protection insurance benefits anyone who relies on their income to cover living expenses. It is particularly important for individuals with financial dependents or limited savings to sustain themselves in the event of a loss of income due to illness or injury. This includes both employed individuals and self-employed individuals. -
What are the key factors to consider when comparing income protection insurance quotes?
When comparing income protection insurance quotes, it’s important to consider the monthly benefit amount, benefit period, waiting period, coverage options, premium type, policy exclusions, and any additional benefits or riders offered. You should also evaluate the insurer’s reputation, financial stability, and customer reviews. -
How can I find the best income protection insurance providers in Australia?
To find Australia’s best income protection insurance providers, you can start by researching and comparing different insurers. Look for insurers with a strong reputation, positive customer reviews, and a track record of financial stability. You can also seek recommendations from friends, family, or financial advisors. Additionally, online insurance comparison platforms and websites can provide you with a list of reputable insurers to consider. -
What should I look for in an income protection insurance policy?
When evaluating an income protection insurance policy, consider coverage options, waiting period, benefit period, exclusions and limitations, premiums, and additional benefits. Ensure the policy aligns with your occupation and personal circumstances and provides adequate coverage for your income protection needs. -
Can I modify my income protection insurance policy as my circumstances change?
Many income protection insurance policies offer flexibility to modify your coverage as your circumstances change. You may be able to adjust your benefit amount, waiting period, and benefit period to better suit your needs. However, it’s important to review the terms and conditions of your policy and consult with your insurance provider to understand the specific options and requirements for modifying your income protection insurance policy.
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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
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!
On a salary of approx. $75,000 what would you pay age 58 female, non smoker, sales support
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.