Personal income protection

What is income protection?

Income protection is a form of insurance which will replace up to 75% of your income through regular payments over a period of time in which you are unable to work due to illness or injury.

Income protection differs from trauma insurance or total and permanent disability insurance as it does not provide a single lump sum pay out, and instead aims to replace the flow of your regular income through monthly payments to keep you and your family on track.

Income protection is a very important consideration for anyone who relies on a regular income, and is particularly important if you are self-employed or a small business owner to help you stay afloat in the event you are unable to work.

What are the key features of an income protection policy?

• Payments: Income protection will provide regular monthly payments of up to 75% of your income.
• Length of Cover: Depending on your policy and the selected benefit period, your income protection can cover you from two or five years up until age 65 or 70. Again, depending on the conditions in your policy, if you are nearing your 65^th or 70^th birthday, your policy will last only until the agreed age.
• Waiting Period: The length of the waiting period on your cover depends on your policy and the level of premiums that you pay, however it is generally a 30 day waiting period from the day of your claim to receiving your first payment.
• Scope of Cover: Your income protection will cover you for most injuries that could have happened in any place at any time of the day. You will be covered for a range of illnesses as listed by your insurer. The level of cover that you buy and the cost of your premiums can increase the scope of your cover.
• Superannuation: Income protection will also pay up to a 15% super contribution to ensure that your retirement is not affected due to being unable to earn an income over a period of time in your working life.
• Tax: The premiums that you pay on your insurance policy are tax deductable, however if you make a claim, you may have to pay tax on the benefits you receive.

For a better understanding on different types of income protection, check out our page on comparing policies.

I already have work cover, so do I even need it?

Work cover will only cover you when you are at work or in a workplace situation, personal income protection will cover you for injuries or illnesses 24 hours a day, seven days a week, regardless of where you are or what you were doing at the time of your injury.