Income Protection Insurance

Income Protection will cover up to 75% of your salary for a period if you’re temporarily unable to work because of sickness or injury. However, it doesn’t just have to be illness: there is no actual list of events in which you can claim. Anything that stops you from working could potentially be a basis for a claim, providing very broad protection. You will continue to receive up to 75% of your income until you return to work or to the end of the benefit period.

What options do I have?


Different companies will offer a range of individual options and some may be unique, however some common options that you will need to decide on include:
  • Agreed or Indemnity benefit payment type
  • Waiting period
  • Benefit period

Is Income Protection different between Insurers?

Income Protection can differ markedly across different insurance companies. The main differences are related to:

  • Definitions of total disability, partial disability and recurring disability;
  • Definitions of income; and
  • Range of additional benefits (e.g. nursing care, hospital benefits, accident benefits).

How much does Income Protection cost?

Income Protection Insurance can be more expensive than Life Insurance, but the Income Protection premiums are generally tax deductable. Benefit payments, however, are considered income and therefore subject to tax (at marginal tax rates). Income Protection Insurance premiums vary according to the following:

  • Age: premiums may increase or cover can decrease as you get older
  • Gender: rates for females are higher than males
  • Habits: whether or not you smoke
  • Occupation: manual labour attracts higher premiums than office work
  • Waiting period: the time you choose to wait before receiving payment
  • Benefit period: how long you will receive payments in the event of a claim
  • Agreed or Indemnity benefit payment type
  • Extras: this could include increasing claims and accident benefit (which can reduce the waiting period).