Compare income protection insurance

What's the average cost of income protection?

Finder's research team gathered 150+ quotes from 10 insurance brands across 32 different customer profiles (e.g. diverse ages, smoker statuses, occupation types and genders) in February 2023.

Based on this research, here are the average costs for non-smokers and smokers. This average is calculated across male and female white-collar workers between the ages of 30 and 40 for each brand.

• What factors affect the cost of income protection?

  Factor	What happens?
  Age	Younger people pay less for income protection insurance.
  Profession	People in high-risk or very physical jobs will pay more for income protection.
  Biological sex	Premiums are generally more expensive for women than men.more info button
  Health	People with pre-existing medical conditions may pay more or face more exclusions.
  Smoking habit	Smokers will pay more for premiums or be declined cover altogether.
  Benefit amount	The higher the potential monthly benefit, the higher the premiums.
  Waiting period	Setting a longer waiting period will reduce your premiums.
  Benefit period	A shorter benefit period will mean cheaper premiums.
  Additional benefits	Policies with lots of added extras may be more expensive.
  Hobbies	People with high-risk hobbies may face more exclusions or higher premiums.

Here's what some experts had to say...

While it's counterintuitive, you'll want to consider insurance when you're in tip-top shape. This is absolutely a worthwhile investment of your time and helps provide a safety net... lock it in early to get better terms if you can. If you wait and get your cover at a later date, you might find the specific condition you've since had is excluded from your policy.

Pascale Heylar-Moray
Financial literacy advocate

No one is ever really prepared for life's harsh surprises, but the right income protection insurance can help soften the blow during a tough time for your family: financially, emotionally and physically while you're on a claim.

Phil Thompson
Financial Adviser at Skye Wealth

There's a lot more to finding the right cover than simply looking for the cheapest deal. Ultimately, you get what you pay for with income protection. In my view, policies held in super are rarely worth it in the long run. Going directly to an insurer or a broker is the pathway to a more comprehensive policy.

James Martin
Finder's life insurance editor

Why you can trust Finder's income protection experts

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Since 2016, we've helped thousands of Australians find income protection by explaining your cover options, simply and clearly.

Frequently asked questions on income protection insurance

• Who can apply for income protection insurance?

  Australian residents over the age of 18 can apply for income protection insurance. Most insurers stop offering new policies to people once they reach 60 years old.

  You will also have to meet minimum work requirements before you are approved. Typically, this is 20 hours a week, but it varies between different insurers.

• What can I use income protection insurance benefits for?

  Income protection insurance is designed as a temporary replacement for your salary, so you can spend it however you like. Remember, you'll have a little bit less to work with because income protection will never cover more than 85% of your wage, but it can still help with the following:

  • Your rent or mortgage
  • Medical expenses related to your illness or injury
  • Regular bills including utilities, school fees and home insurance
  • Credit card bills, car loans and other debts
  • Daily living expenses, including groceries and household goods

• Is it better to buy directly from an insurer or get help from an adviser?

  It's up to you to decide based on your circumstances.

  An adviser or broker will be able to help you find cover that is more tailored to your situation. This might be more beneficial if you have a long medical history or a particularly dangerous job. Keep in mind that you'll need to pay a broker a fee for their service.

  On the other hand, if you have more straightforward needs, then going direct has plenty of benefits: your application can proceed quickly with fewer questions and you can avoid a medical exam.

• Can I get income protection if I'm self-employed?

  Yes, you can find income protection insurance if you're self-employed in order to guard against an accident or illness. But policies are now set up with indemnity value. This means an insurer will base the payout on what you earned in the months leading up to your claim. So, if you have a fluctuating income, then there's a risk you may get a less generous payout.

• What if I already have cover in my super?

  You can have an income protection policy through your super, as well as through a standalone policy. To see what (if any) insurance you have inside your super, call your super fund and inquire with them. They can inform you of the steps you need to take if you choose to amend or cancel your cover.

  Good to know: Income protection is often far more basic within super accounts, so you may well find better terms and more tailored insurance by going direct with an insurer.

• Can I get cover if I only work part time?

  Yes. Insurers typically offer income protection to people who work at least 20 hours a week and have been in the same role for 12 months.

• Can I get income protection without a medical?

  Yes. Some insurers offer no-medical income protection insurance. This is aimed at people who are in good health and have no pre-existing medical conditions. The approval process will likely be speedier.

• Does income protection cover pregnancy?

  If your pregnancy is comparatively straightforward, you won't be able to claim on your income protection insurance. However, if it poses a serious and prolonged health risk, you may be able to make a claim in some circumstances.

• Are premiums tax-deductible?

  Often, yes. The Australian Taxation Office (ATO) has confirmed that you can claim the cost of insurance premiums if they protect against loss of income.

  Also, income protection premiums can't be claimed on insurance held through your super fund (where premiums are deducted from your super contributions).

  Keep in mind only premium payments are tax deductible; any payouts from an insurer aren't. Any benefits you receive must be included on your tax return.

• What's the cheapest income protection?

  Finder research has shown that cheap income protection can start from just $23.10* per month. We looked at 14 brands and found an average monthly premium of $41.95 for a 20-year-old male with a salary of $50,000.

  Keep in mind that the cheapest income protection policy may not be one that gives enough cover for your needs.

  *These figures were for a 20-year-old male earning a yearly income of $50,000. Correct as of January 2021.

• How do waiting periods work with income protection?

  A waiting period is the amount of time you'll need to wait before you can make a claim on your income protection policy. This period is usually 14, 28, 60 or 90 days. If you have the option to increase your waiting period, this can help lower the cost of your premiums. But you won't be insured for this time, so it's risky.

• What isn't covered by income protection?

  Income protection will not cover you in the event of employment termination or if you are made redundant. It is designed to assist a policyholder in the event they cannot perform their job due to illness or injury.

  It's important to read your policy's product disclosure statement (PDS) for a full list of exclusions.

  Never covered

  ❌ Drug- or alcohol-related sickness or injury
  ❌ Normal and uncomplicated pregnancy
  ❌ Acts of war or terrorism in countries that have a do-not-travel warning
  ❌ Self-harm, including exposing yourself to risks of sickness or injury
  ❌ Illness or injury as a result of criminal activity

  May not be covered

  ❌ Specific illnesses within a set period of buying your policy
  ❌ Back pain, unless it lasts more than a set period
  ❌ A football injury, unless it lasts more than a set period
  ❌ Pre-existing conditions
  ❌ Some dangerous sports
  ❌ Some dangerous occupations

• Is income protection calculated on gross income?

  Yes, income protection pays up to a percentage of your pre-tax (gross) income. It's set up to replace the income from your annual earnings over the 12 months before your illness or injury.

• Does income protection cover loosing your job?

  No, income protection insurance doesn't cover you loosing your job. However, you can opt for alternative products to support you, your family and your lifestyle if you were to loose your job such as mortgage protection insurance.

• How long will income protection help me if I'm out of work?

  It depends on the maximum benefit period and how long your recovery takes. Generally, income protection policies are up to 2 or 5 years. But the likes of NobleOak and Aspect could offer you far longer protection.

• Aside from income protection insurance, how else can I protect my income?

  

  Life cover

  Life insurance pays a lump sum if you die during the policy's term. A policy usually includes terminal illness cover and an advanced payout for funeral costs.
  Typical cover range: $1 million to $25 million.

  

  Total & permanent disability (TPD)

  TPD covers you if you get severely injured or sick. For example, if you become blind or paralysed after a car accident and become permanently disabled.
  Typical cover range: $50,000 to $5 million.

  

  Trauma insurance

  Trauma cover, sometimes called critical illness cover, is a policy add-on that pays a lump sum if you are diagnosed with a major medical condition, such as cancer or a heart attack.
  Typical cover range: $500,000 to $2 million.

This article was updated on 4 May 2023. We added information about how Finder is editorially independent and the research behind our income protection awards.

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