Replacing the Income You'd Otherwise Lose
Income protection pays an ongoing monthly benefit — typically 70–75% of your pre-tax income — if illness or injury stops you working, for as long as your chosen benefit period allows. It's the only major personal insurance product designed to replace an income stream rather than pay a single lump sum.
What It Costs
The Two Levers That Shape Both Cost and Payout: Waiting and Benefit Periods
Your waiting period (how long you're off work before payments start) and benefit period (how long payments continue) work together to set both your premium and how much protection you actually have — see our dedicated guide on choosing between them.
Agreed Value vs Indemnity
Older 'agreed value' policies lock in your insured monthly benefit at application based on your income then, regardless of income changes later — these are largely no longer available for new policies due to regulatory changes. Most current policies are 'indemnity' style, where your payout at claim time is based on your income in the period immediately before you stopped working, which needs to be proven with payslips or tax returns.
Tax Treatment
Income protection premiums are generally tax-deductible when held outside super, and the benefit payments themselves are treated as assessable income and taxed accordingly — worth factoring into your actual take-home comparison between policies and premium structures.
This page is for educational purposes and isn't personalised financial advice. Premiums, terms and eligibility vary by insurer, occupation and individual circumstances — always check the Product Disclosure Statement (PDS) before buying.