Income protection insurance is the financial lifeline you don’t realise you need until the unexpected happens.

It’s a common misconception that income protection insurance is only for the wealthy. In reality, the opposite is true. If you rely on your income to cover mortgage repayments, household expenses, and daily living costs, have you considered how you’d manage financially if that income suddenly stopped?

Whether it’s due to illness or injury, income protection insurance helps ensure you can keep up with your financial commitments while you focus on recovery.

At Morgan Insurance Brokers, our experienced team of brokers can help you find the right cover to suit your needs. Reach out today to protect your income and your peace of mind.

The Basics of Income Protection Insurance

Whether you have income protection insurance through your super, an employer, or private insurer, it’s important to understand exactly how the coverage works. Key considerations include: 

Waiting Period 

The waiting period for the insurance claim represents the minimum amount of time you need to be unable to work before you can begin receiving benefit payments. In most cases, this ranges from two weeks to three months.

With some policies, you may be able to customise your waiting period. Generally, the longer the waiting period, the more affordable the policy. When deciding on a waiting period, it’s important to consider how much sick leave, annual leave, and emergency savings you currently have available.

Benefit Period 

The benefit period refers to how long the monthly payments will continue if you remain unable to work due to illness or injury. Most income protection policies offer benefit periods ranging up to five years or to a specific age.

It is important to note that while a longer benefit period typically results in a more expensive policy, it also provides a longer and greater level of protection during your time away from work.

Type of Premiums

The type of premiums you choose, whether stepped or level also impacts the cost of your policy. Stepped premiums are generally recalculated at each renewal, meaning the cost may increase as you age due to a higher likelihood of claiming.

In contrast, level premiums are typically more expensive at the start of your policy. However, the cost does not increase based on your age, so premium rises tend to happen more slowly over time.

Payout Amount

In Australia, most income protection insurance policies offer up to 75% of pre-tax income. Some may also include an additional 10–15% to cover superannuation contributions.

Maximum monthly payments vary by provider, with some specialised policies offering up to $30,000 per month.

Benefits of Income Protection Insurance While Recovering 

Designed to replace a portion of your income, income protection insurance ensures you continue receiving a steady monthly payment to support your lifestyle while recovering from an injury or illness. Key benefits of income protection insurance include:

A continuous stream of income even if you can’t work

While you may have savings, a prolonged period of not being able to work can quickly deplete them. During such times, income protection insurance provides you with adequate financial support, helping you manage ongoing expenses without having to exhaust your existing savings.

Income protection protection insurance can be customised

Depending on your provider, your policy can be tailored to suit your individual needs and preferences. This includes adjusting elements such as the waiting period, benefit period, and premium structure. For example, you could choose a longer benefit period with lower monthly premiums, or opt for a shorter waiting period with higher premiums.

Income protection insurance may be tax deductible 

In many cases, the premiums you pay for income protection insurance are tax-deductible, making it a more cost-effective option. This generally applies when the policy is held outside of your superannuation. It is important to confirm your eligibility with the ATO or a qualified tax professional. Alternatively, by working with a broker, you can receive tailored advice to help guide your decision.

Get Income Protection Insurance While You’re Young

A core component of any financial plan, income protection insurance helps safeguard you if the worst were to happen. The team of brokers at Morgan Insurance Brokers can guide you in securing the best policy for your needs, offering much needed peace of mind during challenging times.

If you need help obtaining income protection insurance or are unsure about specific details, contact us to speak with one of our experienced brokers.