What is Income Protection and Why Does it Matter in Australia?
If you rely on your income to pay the bills, keep the lights on, and support your lifestyle, then income protection might be worth understanding.
Income protection insurance is designed to pay you a regular benefit (typically monthly) — usually a percentage of your income—if you’re unable to work due to illness or injury. Most policies cover up to 70% of your income, depending on the terms.
It’s not just for the self-employed or high-income earners. Everyday Australians—from tradies to professionals—can benefit from knowing they have some level of financial support if life takes an unexpected turn.
How Waiting Periods and Benefit Periods Work
- Waiting period – This is the time you need to be off work before payments begin. Common options are 30, 60 or 90 days. A longer waiting period generally means a lower premium but requires you to rely on your own savings for longer.
- Benefit period – This refers to how long you’ll receive payments if your illness or injury continues. Options often include 2 years, 5 years, or up to age 65. The longer the benefit period, the more protection—and usually, the higher the cost.
Tax and Ownership Considerations
Income protection can be held either personally or through your super fund. Each option has its pros and cons:
- Personally held policies – Premiums are generally tax-deductible, and benefits are paid directly to you (taxable as income).
- Held via super – Premiums are paid from your super balance, which may help with cash flow, but there may be restrictions or delays when making a claim.
We can’t tell you what’s right for you, but we can help you explore your options, understand the key differences, and compare what’s available across providers.
If you’d like help navigating your choices, get in touch. We provide general advice only—but we’re here to support you through the process.
Final Word:
Income protection helps provide peace of mind if illness or injury interrupts your ability to earn.
Understanding how much cover you may need is a good first step — our Insurance Needs Planner can help you think it through.
Explore more FAQs or contact us today.
