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How to Find the Best Income Protection Insurance in Australia

Published: July 27, 2018

If you’re at a crossroads as to which income protection policy will best suit your specific circumstances, it’s generally a good idea to start by comparing quotes and reviewing the benefits offered.

It can be difficult to know whether you’re getting value for money. The cheapest policy isn’t necessarily the best and might not provide you with the level of protection you need. Also, one size does not fit all, the best policy for you might not be the best option for someone else.

Below you’ll find information about some of the income protection providers we compare and what you should consider before choosing a policy.

Australia's leading income protection insurance

Income protection insurance covers up to 75% of your regular income when you are unable to work because of an illness or injury. The best income protection policy is the one that removes the stress of needing to pay the bills, while you recuperate. Top income protection policies generally offer you a choice of benefit and waiting period, at a premium price you can afford.

Policy Maximum Monthly Benefit Percentage of Income Covered Benefit Period Waiting Period  
NobleOak Direct Income Protection AIA
$25,000
75%
2 years or up to age 65
30 or 90 days
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Receive up to 75% of your monthly income with Income Protection Insurance. Cover essential living expenses when you’re unable to work due to an illness or injury. Consider the PDS. Issuer is NobleOak Life Limited ABN 85087648708. AFSL 247302.

Compare income protection from some of the leading Australian insurers

Company and Income Protection Policy Maximum Monthly Benefit Average Monthly Premium Benefit Period Waiting Period

Priority Protection Vitality		 75% Up to $60,000* $36.28 2 or 5 years, or up to your age 65 or 70* 14, 30, 60 or 90 days, 1 or 2 years

Insurance with On Track		 75% Up to $30,000 $39.46 2 or 5 years, or up to your age 65 14, 30, or 90 days, 1 or 2 years

Accelerated Protection – Health Sense		 75% Up to $30,000 $41.84 1, 2 or 5 years, or up to your age 65 14, 30, 60, or 90 days, 6 months, 1 or 2 years

Life Solutions		 75% Up to $40,000* $45.90 2 or 5 years, or up to your age 60, 65 or 70* 14, 30, 60, or 90 days, 6 months, 1 or 2 years

OneCare Income Secure Essentials		 Up to 80% $46.87 Age 55, 50, 65 or 70* 30, 60, or 90 days, 6 months, 1 or 2 years

Complete		 75% Up to $60,000* $47.88 2 or 5 years, or up to your age 65 or 70* 14, 30, 60, or 90 days, 1 or 2 years

Elevate Insurance Solutions		 75% Up to $60,000* $51.40 2 or 5 years, or up to your age 60, 65 or 70* 30, 60, or 90 days, 6 months, 1 or 2 years

Protection		 75% Up to $30,000 $51.40 2 or 5 years, or up to your age 65 14, 30, 60 or 90 days, 6 months, 1 or 2 years

Protection Plans		 75% Up to $30,000 $55.07 2 or 5 years, or up to your age 55, 65 70 or 80* 14, 30, or 90 days, 6 months, 1 or 2 years

Wealth Protection		 75% Up to $30,000 $58.43 1, 2 or 5 years, or up to your age 65 or 70* 14, 30, 60 or 90 days, 6 months, 1 or 2 years
The above information is based on a 27-year-old, non-smoking male, with an annual income of $75,000 working as a qualified Accountant and applying for a stepped premium, retail policy (18 July 2018).

*Note: We used the insurers latest PDS for specifics. Your maximum cover amount, benefit period and waiting period are generally subject to your occupational type. Maximum benefit amounts exceeding $30,000 a month usually only have a two-year benefit period. Benefit periods exceeding age 65 might exclude some benefits and options.

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What to consider when making an income protection insurance comparison

When deciding which income protection policy is right for you, it’s important to look for an insurer that offers you the level of protection you require at a price you can afford. The easiest and quickest way to protect your ability to earn an income is to gather quotes from a variety of insurers and compare their benefits and features side-by-side.

Every person has a different budget and lifestyle. The best income protection policy for you is usually dependent on your occupation, how much you can afford to pay, and your living expenses.

To help you find cover suited to your requirements, review and compare the 9 fundamental principles of an income protection:

  • Policy type

    The income protection policy type you choose will influence how much you’ll pay and the monthly benefit you can expect to receive:

    • Agreed value: More expensive premiums but provides more assurance as your benefit is usually based on your income before application.
    • Indemnity value: Cheaper premiums with proof of income only required at claim time, meaning if your salary had reduced in the last couple of months, so might your benefit amount.
    • Guaranteed agreed value: Offered by select insurers, where your proof of income at application time is approved and endorsed by the insurance company.

  • Premium structure

    Depending on the insurer you choose, you generally have a choice of which income protection premium will best suit your specific circumstances:

    • Level premiums: Generally, more expensive at the beginning, but does not increase each year due to your age.
    • Stepped premiums: Usually start off cheaper but increases every year while your cover amount remains the same.
    • Optimum/hybrid premiums: Start on a higher than usual stepped premium structure, increasing yearly, where it converts to level premiums when reaching a predetermined price.

  • Maximum age you can apply

    All insurers have a cut off age as to when you’re still eligible to apply for a policy; this can vary between 50 and 60 years old, depending on whether your occupation is defined as white collar or blue collar.

  • Monthly benefit

    The monthly amount you'll receive when qualifying for a disabling injury or illness. Most insurers provide cover up to 75% of your regular income. However, select companies will offer you the option (either built-in or optional) to increase your monthly benefit.

  • Benefit period

    The maximum length your income protection policy will pay the monthly benefit, for example, 2 to 5 years or up to your age 65. Generally, the longer your chosen benefit period, the more expensive your premiums.

    While you can’t possibly know how long you’ll be unable to work should something unforeseen happen in future, try to choose a benefit period based on how you answer the following questions:

    • How dangerous is your occupation and/or lifestyle?
    • How long would your family be able to sustain your current lifestyle without your added income?
    • At what age do you plan on retiring?
    • What are the general chances that you become so sick or injured that you won't be able to return to work?

  • Waiting period

    The amount of time you’ll have to be off work due to your accident or illness before your start to accumulate benefits. Depending on your insurer, you'll usually have a choice of waiting period, from 14 days, up to 2 years. Usually, the longer your waiting period, the cheaper your premiums.

  • Built-in benefits

    The best value income protection insurance usually includes a list of built-in benefits that add to the overall quality of your policy. For example, the premium waiver benefit, specific injury benefit, rehabilitation and accommodation benefit and the suspending of cover benefit.

  • Optional features

    Top rated income protection companies typically also offer a list of features you can add for an extra fee. For example, the day 1 accident benefit, increasing claims option and the lump sum benefit option.

  • Distribution channel

    You’ll also need to decide how you’ll buy your policy; directly from the insurer (Non-advised), through a broker or comparative website (Advised/Retail) or through your superannuation (Group).

    • Directly from the insurer: It's up to you to do the research and determine whether a policy is suited to your unique requirements. No advice is provided. Canstar’s 2018 direct income protection award for outstanding value was given to NobleOak and Virgin Money.
    • Through an adviser: Receive assistance in conducting income protection insurance reviews and choosing the best one. The process usually includes full underwriting, providing you with more confidence that a valid claim will generally be paid.
    • Via group insurance: Taking out income protection through your super fund might reduce the cost of your premiums, but income protection coverage is usually limited.

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Tips for picking the right income protection policy

The best income insurance policy for you should ideally:

  • Provide the maximum cover amount you need to continue your lifestyle, including paying the bills and household expenses.
  • Covers you for the length of time you want.
  • Offers affordable premiums.
  • Includes a list of built-in benefits and provides extra features you can add to tailor your policy further.

Before choosing your ideal income insurance, be sure to shop around and gather quotes. See what’s out there and find a policy that most closely matches your requirements.

Frequently asked questions and answers

Which company offers the utlimate self-employed income protection?

Most self-employed people don’t have sick leave, holiday leave, or maternity leave. Other than government benefits from Centrelink, there is no safety net should you become ill or injured and be unable work.

To protect yourself and your family, you probably need income protection. Because you generally do not have a fixed salary, an indemnity policy might suit you best. Typically, an insurer will calculate your monthly indemnity benefit based on your pre-tax share of the gross income after deduction of trading expenses, in the 12 months immediately before the date of your incapacity. 

Some insurers operate on the best consecutive 12 months over the last 2 or 3 years as they realise that self-employed people often have a fluctuating income.

More and more self-employed Australians prefer income protection from insurers offering a 3 tier definition approach:

  • Duties-based: You're not able to perform income producing duties.
  • Hours-based: Because of a sickness or accident you're working in a reduced capacity.
  • Income-based: Focuses on the reduction in income suffered because of your illness or injury.

What's the best income protection insurance for doctors?

Income protection insurance for doctors should generally be chosen based on the insurer’s definition of a claimable event. Select insurers let you decide which of the 3 tier definitions (duties, hours or income-based) is most applicable to your situation.

You might also want to look for a policy offering needlestick coverage, which provides you protection should a needlestick injury result in loss of income. 

Because of the nature of your work, contracting a blood-borne disease such as AIDS, Hepatitis B or Hepatitis C may require a change to your job, or that you cease working altogether. Either of these situations is likely to impact your income earning ability significantly.

What is the ideal income protection cover for redundancy?

Generally, income protection companies do not cover redundancy or involuntary unemployment. However, there are a select number of providers offering redundancy specific insurance, either as a stand-alone product or added benefit. Such a policy usually provides you with a monthly benefit for a limited number of months, generally up to 3 months. For example, AAMI, ANZ, InsuranceLine, Nib and Virgin money.

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