Key takeaways
- Replaces up to 70% of income if you cannot work due to illness or injury.
- Waiting period is how long before benefits start — shorter costs more.
- Benefit period caps how long payments continue.
Income protection is the cover most Australians overlook — until an illness or injury stops them earning. Here is how it works and what to compare.
On this page
How income protection works
If illness or injury prevents you working, the policy pays a monthly benefit — typically up to 70% of pre-disability income. Payments continue until you return to work, reach the benefit period limit, or turn 65 (varies by policy).
Waiting and benefit periods
Waiting period: 14, 30, 60, or 90 days before payments start. Benefit period: 2 years, 5 years, or to age 65. Longer waiting and shorter benefit periods reduce premium.
- Shorter waiting period = higher premium but faster support
- To age 65 benefit period suits long-term risks
- Some policies offer partial disability benefits
What to compare
Definition of disability (own vs any occupation), waiting period, benefit period, indexation of benefits, and exclusions for mental health or pre-existing conditions.
Tip
General information only — not personal financial advice. Consider your own circumstances and read the Product Disclosure Statement (PDS) before purchasing any policy. Moneyhero may earn referral fees from some providers when you switch through us; this does not change how results are ordered. How we compare
Frequently asked questions
Income protection questions — waiting periods, benefit periods, indemnity vs agreed, and tax.
Are income protection premiums tax-deductible?
Yes. Premiums for income protection insurance held outside super are generally fully tax-deductible as a personal tax deduction. The monthly benefits you receive are treated as taxable income when claimed. This tax treatment makes income protection relatively efficient for higher-income earners.
What does 'own occupation' mean in income protection?
An 'own occupation' definition means the insurer pays the benefit if you are unable to perform the duties of your specific occupation — a surgeon who can no longer operate but could theoretically work as a medical administrator would still qualify. 'Any occupation' definitions are broader and harder to claim on. Own occupation cover is more expensive but more protective.
Can I get income protection if I am self-employed?
Yes — self-employed people can hold income protection, but the benefit calculation is based on documented taxable income. If you are structured as a sole trader or company, the insurer will look at net profit or taxable income, not gross revenue. Maintaining clear income documentation is important for claim assessment.
What happens to income protection payments if I return to work part-time?
Most policies include a 'partial disability' or 'rehabilitation' benefit that reduces the monthly payment proportionally if you return to work part-time. The benefit tops up the difference between your partial income and the benefit amount. Check the partial disability terms in any policy you consider.