Introduction
There are a couple of key decisions you'll need to make when you want Income protection Cover. How you set up your cover will have an impact on your premiums.
Here we'll walk you through what to consider.
⏳ Choosing a Waiting Period
The waiting period is the time between when you become disabled and when your income protection payments begin. It typically starts from the Date of Disablement or the date of diagnosis (See more about the claims process).
Common waiting period options include 30, 60 and 90 days.
Key considerations:
- How much sick leave do you have?
- Do you have an emergency fund?
- How long could your savings cover your monthly expenses?
- Shorter waiting periods cost more. Do you need to balance risk with ongoing cost?
Notes:
- Some hazardous jobs may only qualify for longer waiting periods.
- Premiums are generally still payable during the claim waiting period, but some insurers may refund them if your claim is accepted.
- Some longer waiting period may be available, such as 2 years, which could be handy if you have an employer paid insurance which only has a limited benefit period, such as 2 years.
👉 Learn More About Waiting Periods
📅 Choosing a Benefit Period
Benefit period the length of time your claim will be paid for. Common options are (2 years, 5 years, to age 65/70)
Key considerations:
- How long you will need the insurance to cover your future expenses such as day to day expenses, medical bills, school fees;
- Your debts such as loans or credit cards that will need to be serviced.
- Longer benefit periods cost more. Do you need to balance risk with ongoing cost?
- Could you complement a short term Income Protection cover with a TPD cover - giving you the quick safety net of Income protection with the long term security of a TPD in the event you were unable to return to work. (Jump to Income Protection vs TPD)
Notes:
- Not all benefit periods are created equal, some insurers or products only offer “any occupation” benefits beyond 2 years.
- Longer benefit periods are often unavailable for occupations considered hazardous.
- Longer benefit periods, such as up to age 65 or 70, will increase your premium, but may still represent good value when compared to alternatives such as TPD.
👉 Learn More About Benefit Periods
🏦 Paying for Your Income Protection Inside Super
You can choose to pay a retail income protection policy from your Super fund. While this can have cashflow and tax benefits there are three key disadvantages:
Key considerations:
- If your income protection policy is owned inside superannuation, you must also satisfy the super definition of “Temporary Incapacity” to receive payments.
- Premium can eat into your retirement savings
- Policies held in Super can have limited benefits.
Note: There are strategies to structure your cover so that most premiums are largely paid via super, while still avoiding super-related claim restrictions.
👉 Learn More About Income Protection in Super
🧮 Calculating Your Monthly Benefit
Income protection cover is generally capped at 70% of your earnings, although you can apply for less.
Consider how much of your salary is required to support your lifestyle or dependents? For example, if you share costs with a co-parent or partner you should take their contribution into account.
High Income Earners Calculations
When applying for income protection, most retail insurers allow you to apply for between $1,000 and $30,000 per month. But, for high-income earners, many insurers apply tiered income bands, such as:
- 70% of the first $25,000/month
- 50% of the next $16,667/month
- 20% of income above that
- To a maximum total benefit of $30,000/month
⚠️ If you're seeking a higher level of cover, it's worth checking how your preferred insurer calculates the maximum benefit to ensure it matches your income level.
🧭 Choosing an Income Protection Insurer
When choosing income protection insurance, it's not just about the insurer's name - it's about how the policy works when you need to claim.
Are income protection insurers in Australia reliable?
Yes. All income protection insurers in Australia are regulated by APRA and ASIC and must meet strict financial requirements designed to ensure claims can be paid.
From a financial stability perspective, all approved insurers operate within a strong regulatory framework.
Do income protection policies differ between insurers?
Yes - and the differences matter.
While income protection policies may look similar at a high level, definitions and features vary, including:
- How disability or incapacity is defined
- Waiting and benefit periods
- Partial disability and return-to-work benefits
- Superannuation contribution features
💡 Important: Choosing the right insurer often comes down to selecting a policy that matches your work, income structure, and risk profile - not just the cheapest option.
Why do income protection premiums vary so much?
Premiums for income protection can vary significantly between insurers, even for similar cover. Differences are driven by:
- Claims experience
- Occupation risk
- Policy features and flexibility
- Premium structure (e.g. stepped vs level)
Comparing insurers can help ensure you're getting value without compromising on cover quality.
Why your choice matters long term
Your health at the time you apply is important. If your health changes later, switching insurers may result in higher premiums or exclusions.
Choosing a well-structured income protection policy from the outset can help avoid limitations down the track.
Ready to compare policies?
Use the quote tool to customise what is included in your cover and see how options affect your premium.
Get a QuoteFrequently Asked Questions
How is my monthly benefit calculated? +
Up to $20k monthly premium it's usually a simple 70% of your income. However, there can be variations at the higher end, see monthly benefit calculation.
What is the difference between a 2 year, 5 year or to age 65 benefit? +
This describes how long your insurer will continue to pay your benefits when you claim. 2 year, 5 years or until you turn 65.
How do I choose the right waiting period? +
Consider how long you could meet your financial obligations without your income, take into account your savings or emergency fund, and any sick leave you may have.
How do I choose the right benefit period? +
Choosing a benefit period can be tricky, longer benefit periods are more expensive and many claimants do not return to work after a period of 2 years on claim. Consider supplementing a short-term income protection cover with a TPD cover. See Income protection and TPD.
Should I hold income protection inside or outside super? +
While there can be cashflow and premium benefits to holding a policy n super you will be required to meet the conditions of release (see IP in super) and premiums can impact your retirement savings.
Can I change my waiting period or benefit period after purchase? +
Many insurers will allow a change to waiting of benefit periods however any increase in benefit period and/or decrease in waiting period may lead to underwriting and increased premiums.
Can I increase my cover if my income goes up? +
Usually yes, many policies will have a benefit that allows you to increase without underwriting for income increases provided you apply within a defined timeframe. However, you can usually increase at any time with some underwriting. You will not be able to increase your cover beyond 70% of your income.
How much of my income can I insure? +
In Australia you can insure up to 70% of your regular income, however many retail policies offer a super contribution option (usually for extra cost) which adds a contribution to your super fund of up to 10%.
Is income protection available if I'm over 50 or 60? +
Retail income protection is usually available for entry ages up to 59/60 depending on the insurer. However, it does get more expensive as you age.
Can doctors and high income earners get income protection? +
Yes, monthly benefits are usually capped at $30k but there are nuances to the monthly benefit calculation at the higher end of the monthly benefits. See how monthly benefits are calculated
What age can I apply for income protection insurance? +
IP is usually available for new policies between 18 and 60. Cover will often expire at age 65.
Do I need to be working a minimum number of hours to get cover? +
Yes, usually there is a requirement to be working a minimum of 20hours per week.
How do insurers assess pre existing conditions? +
Retail insurance has a concept called “Duty not to make a misrepresentation” this means that you should discuss anything you know, or reasonably should have known, at the time of application. The insurer may then exclude that element or add a loading to your premium. If you don't disclose and then attempt to claim you may find the insure will void your cover entirely.
Can I get income protection without medicals or proof of income? +
The underwriting requirements differ between insurers but are usually based on your age, occupation and your responses to the personal statement (your health, family health history and lifestyle questions). In some cases, you may not be asked for any additional details.
Are there occupation restrictions? +
Yes, some higher risk occupations may find restrictions on waiting and benefit periods available and may be subject to higher premiums.