Income Protection Insurance | Income Protection

*iSelect’s partnered with Lifebroker to help you compare a range of Income protection Insurance policies. Not all policies are available at all times or in all areas. Any advice provided on this website is general in nature and does not consider your situation or needs. Please consider if any advice is appropriate for you before acting on it. Learn more.

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What is Income Protection Insurance?

An income protection policy can pay up to 70% of your pre-tax income for a set time period if you’re unable to work due to a partial or total disability (depending on your policy). This could allow you to stay on top of your bills and expenses as you recover*.

Why income protection is important?

Income protection can be important for people who are the sole income earners, regardless of whether you have any dependents. If you do have people relying on your income, it reduces the financial stress that arises for them and yourself if you become ill or injured and are unable to work.

Having this financial protection in place can ensure you and your loved ones can maintain the lifestyle you have worked hard to achieve, even if you are unable to work.

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Income Protection insurance explained, with Canna Campbell.

Canna Campbell from SugarMamma TV breaks down the essentials of Income Protection insurance.

Canna Campbell
SugarMamma TV

Get the facts on Income Protection Insurance

Income Protection Insurance Basics

Learn about the basics of Income Protection including information on waiting periods, benefit periods and contracts.

The benefits of Income Protection Insurance

If you were unable to work due to illness or injury, income protection can help you manage your expenses until you're back on your feet.

Comparing Income Protection Insurance

Anyone who is earning an income can apply for income protection insurance. Choosing the right product can be quite complex. We've partnered with Lifebroker to make choosing income protection tailored to your needs and budget easy. The key factors that will determine your cover include your age, occupation, income and health status (including any pre-existing conditions).

Income Protection Insurance FAQs

What is income protection insurance?

Income protection insurance replaces a percentage of your income in the event that you’re unable to work because of injury, accident or illness. If you were to need to claim, you’ll be provided with an income, generally up to 70% of your gross wages, for a set period of time payable either weekly or monthly which allows you to recover with peace of mind. According to the Australian Securities & Investments Commission (ASIC), income protection may be especially valuable for self-employed small business owners and contractors who may not be protected by a workers’ compensation agreement¹. Some policies can also include or offer an optional extra lump sum payable to your beneficiaries should you pass away, or become permanently disabled in an accident.

Source: 1. https://moneysmart.gov.au/how-life-insurance-works/income-protection-insurance

What does income protection cover?

Income protection generally replaces up to 70% of your income lost as a result of your inability to work because of an injury, accident or illness, for a set period. The illness, accident or injury must incapacitate the policyholder for longer than the policy’s waiting period (learn more about waiting periods in the next question). It’s important to note that while various illnesses and injuries are covered, conditions resulting from certain circumstances may not be eligible for income protection. These can include pre-existing conditions, pregnancy and childbirth, and injuries or illnesses resulting from intentional, criminal, or self-inflicted acts, alcohol or drugs, and sports or motorsports.

What are the waiting periods for income protection insurance?

Insurers generally require you to serve a waiting period to claim on income protection. This is simply the period of time that must pass before you can make a claim. Generally, you must be incapacitated for the whole waiting period as a result of your injury or illness before you can make a claim. According to the Australian Securities & Investments Commission (ASIC), this is often 30 to 90 days¹. Additionally, during the waiting period, your income protection policy will not pay out – only injuries or illnesses that keep you out of work beyond the waiting period may be covered by the policy. If your insurer offers a choice of waiting periods, the option you choose can potentially impact the cost of your premiums.

Source: 1. https://moneysmart.gov.au/how-life-insurance-works/income-protection-insurance

How much does income protection cost?

Like all insurance products, the premiums associated with your income protection insurance will depend on a variety of factors including but not limited to your age, your income and occupation, your lifestyle, and whether or not you smoke. Additionally, policy premiums can differ between different insurers, and whether or not you decide to purchase optional extras (such as death benefits, disablement benefits and business expenses) can further affect your premiums.

What are the benefit periods with income protection?

A benefit period refers to the length of time for which your income protection insurance policy will pay out for a particular claim. Insurers generally set two kinds of limitations to the benefit period:

Maximum time period (for example, 2 or 5 years)
Age cap (for example, up to age 60 or 65)

Depending on your policy and the insurer, income protection policies can offer benefit periods of 12 months, two years, and even until retirement age (generally 65 or possibly 70), at the end of which your monthly or weekly payments will cease. An income protection insurance policy can only be applied for as long as the life insured is below a certain age, such as 60. Should an entry age cap apply, it may supersede a maximum time period, meaning that a policy with a benefits period of two years could only provide one year of payments to a 59-year-old policyholder if the policy expiry age is age 60. However it’s important to read the Product Disclosure Statement of your policy to better understand the terms, exclusions, and limitations.

Does income protection insurance cover redundancy?

Some policies do include coverage should you be subject to an involuntary redundancy. Not every insurer does provide this option, so it’s important that you carefully read the terms and conditions and understand the inclusions prior to taking out a policy. These policies may add additional requirements, such as you cannot volunteer for a redundancy package, and you cannot have been fired for misconduct.

Is income protection tax deductible?

Yes it can be, but only in certain circumstances. One circumstance where income protection is generally not tax deductible, is when it’s bundled into your superannuation. According to the Australian Taxation Office (ATO) premiums payable on income protection policies that are taken out through superannuation and where the insurance premiums are deducted from your super contributions are not tax deductible¹. Generally, only the premiums directly attributable to income protection are tax deductible. Should your policy be bundled with trauma insurance or life insurance, the premiums for these portions of the cover are likely not tax deductible.

Source: 1. https://moneysmart.gov.au/how-life-insurance-works/income-protection-insurance

Do income protection premiums include GST?

All income protection insurance premiums are exempt from GST. As income protection insurance is classified as ‘financial supplies’ by the Australian Taxation Office, they are exempt from GST and all premiums do not include the 10% tax rate applied to other goods and services.

Is there a best income protection policy?

As with all insurance products, there’s no “one size fits all” policy. Different income protection policies will offer varying levels of compensation, subject to differing terms and conditions. Premiums can also vary from policy to policy. In short, a range of factors can determine whether a policy is suitable for you, which is why it can be beneficial to compare policies and shop around.

How to compare income protection policies online

Finding an income protection policy can be a difficult process. But at iSelect we have partnered with Lifebroker to make it easy to compare income protection policies on offer from their range of providers. Start comparing online, or call the team on 13 19 20.

Compare income protection quotes from leading life insurers quickly and easily.

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*iSelect’s partnered with Lifebroker (AFS Licence number: 400209) to help you compare a range of income protection Insurance policies. iSelect earns a commission from Lifebroker for each customer referred through the website or contact centre. Lifebroker do not compare all life insurers or policies in the market.
iSelect Life Pty Ltd - ABN 89 124 304 347, AFS Licence Number 331128. Any advice provided by iSelect is of a general nature and does not take into account your objectives, financial situation or needs. You need to consider the appropriateness of any information or general advice iSelect gives you, having regard to your personal situation, before acting on iSelect’s advice or purchasing any policies. You should consider iSelect's Financial Services Guide which provides information about iSelect services and your rights as a client of iSelect.

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Easily compare income protection quotes

Save time and effort by comparing income protection with iSelect’s trusted partner Lifebroker*

Compare from Lifebroker’s range of leading providers*

What is Income Protection Insurance?

Why income protection is important?

Easily compare with iSelect & Lifebroker

Get acquainted

Get fitted

Get sorted

Income Protection insurance explained, with Canna Campbell.

Get the facts on Income Protection Insurance

Get the facts on Income Protection Insurance

Income Protection Insurance Basics

The benefits of Income Protection Insurance

Comparing Income Protection Insurance

Income Protection Insurance FAQs

What is income protection insurance?

What does income protection cover?

What are the waiting periods for income protection insurance?

How much does income protection cost?

What are the benefit periods with income protection?

Does income protection insurance cover redundancy?

Is income protection tax deductible?

Do income protection premiums include GST?

Is there a best income protection policy?

How to compare income protection policies online

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Compare income protection quotes from leading life insurers quickly and easily.

We'd love to know what you think of our website so we can improve it!