BACK to BASICS: What is income protection insurance?

Income protection is ‘maintain your lifestyle’ insurance. Income protection cover provides a monthly payment to replace your income so you can cover your day-to-day living costs, bills and the mortgage, while you focus on your health.


What is income protection insurance?

If you’re like most people, your way of life is at least partially dependent on your ability to work. Therefore, an extended absence because of sickness or injury could be devastating to your lifestyle, and that of your family.

Income protection is designed to help in such circumstances – replacing your income if you are unable to work due to sickness or injury. The maximum cover is usually 75% of earnings. However, optional additional benefits may be available.


Do I need it?

Ask yourself some questions:

  • Are you employed or self-employed?
  • Would you have a back-up source of income if you were unable to work?
  • How long could you live off your savings alone?

If you rely on your income from paid work to survive, and do not have a large emergency savings fund, then you may benefit from income protection insurance.



How will income protection insurance help me?

The benefit paid by income protection can help you keep up with all the expenses your income usually takes care of. That includes things like mortgage repayments, groceries and your regular bills.

This money also means you don’t have to rely on family and friends, government assistance, or leave entitlements from your employer — none of which are guaranteed to provide a sufficient level of financial support.

It’s important to note that benefit payments for income protection usually don’t start immediately, as a waiting period can apply during which no benefit is payable (this could range from 14 days up to two years).

Exclusions may apply for certain events.

Insurance policies will often vary in their features and benefits, so you should work with a financial adviser to choose a policy that suits your needs and your budget.


What are the chances?

  • According to the Lifewise/NATSEM Underinsurance statistics, some 17,000 working age parents suffer an illness or injury so severe they are forced to stop working every year*.
  • More than 15% will be disabled for more than 3 months during their working life.


Few people can afford any major financial setbacks in their life, which is why it is important to speak to a financial adviser now to ensure you and your family are protected.

Chris Black is an award-winning financial planner based in Toowoomba who specialises in personal insurances including life insurance, income protection, total permanent disability and trauma insurance. To discuss your insurance protection needs, please email us at or book online.

Written by Emma Linton Doig, Practice Officer at Fortress Financial Solutions.

* The LIFEWISE/NATSEM Underinsurance Report, February 2010.

Information on this site may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product.

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