What Is Income Protection Insurance in Australia?

Income protection insurance pays you a monthly benefit — typically up to 70% of your pre-disability income — if you are unable to work due to illness or injury. Benefits are paid monthly for a defined benefit period (usually 2 years, 5 years, or to age 65) after an initial waiting period.

Key Points

Replaces up to 70% of your gross income while you cannot work
Waiting period (excess period) before benefits start: typically 14, 30, 60, or 90 days
Benefit period: 2 years, 5 years, or to age 65 — longer periods cost more
Premiums are generally tax-deductible when held outside superannuation
Available inside or outside superannuation — inside is cheaper but often less comprehensive

How Is Income Protection Different from Workers Compensation?

Workers compensation only applies to injuries or illnesses directly caused by your employment — it is limited to work-related events and is an employer-funded statutory scheme. Income protection insurance covers you for any illness or injury, including those that occur outside of work, and is a private insurance product. Most Australians rely heavily on their income, making income protection one of the most important personal covers regardless of workers comp entitlements.

Should I Hold Income Protection Inside or Outside Superannuation?

Income protection through your super fund is typically cheaper in the short term because premiums come from pre-tax super contributions. However, group policies through super often have lower benefit limits, shorter benefit periods, and less flexible definitions of disability. Retail income protection held outside super is more expensive but usually provides broader cover, higher income replacement, and agreed-value policies (where the benefit is locked in at application, not re-assessed at claim). A financial adviser can help model the right structure for your situation.

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Written by CoverMy Editorial Team

Last reviewed: 17 March 2026

Category: Personal Insurance

What Is Income Protection Insurance in Australia?

Key Points

How Is Income Protection Different from Workers Compensation?

Should I Hold Income Protection Inside or Outside Superannuation?

Ready to get covered?

Related Questions

What Is Income Protection Insurance in Australia?

Key Points

How Is Income Protection Different from Workers Compensation?

Should I Hold Income Protection Inside or Outside Superannuation?

Ready to get covered?

Related Questions