How to compare income protection insurance policies like a pro

Your income helps to fund your quality of life. That's why Australians may consider income protection insurance, a type of cover that pays a portion of your pre-tax income for a period of time if you're unable to work due to illness or injury.

Income protection insurance typically offers up to 70% of your pre-tax income but can also pay up to 90% of your pre-tax income for a period of 6 months, so it's a helpful way to cover the costs of living expenses and provide valuable financial protection in case you are unable to work or earn an income.

Not all income protection insurance policies are the same, meaning it's essential to compare your options. From benefit periods to waiting periods and the cost of premiums, this practical guide reveals tips on how to compare income protection insurance policies to help you when looking for the right policy for your situation. As always, you may wish to consult a professional before taking out a policy to ensure you're making an informed financial decision.

Why do you need to compare income protection insurance policies?

Insurance is a financial product that differs in requirements for each individual and their unique needs and lifestyle. By comparing income protection insurance policies, you can proactively assess which insurer, product and level of cover is the right one for you.

Before making a financial decision like this, you need to have an understanding of how this type of insurance works. By figuring out the features and exclusions that matter to you, the process of selecting an income protection insurance policy will be a whole lot easier.

What factors influence your premiums?

Your income protection insurance premiums are determined by a range of factors, including:

  • Age
  • Gender
  • Health and lifestyle (such as your medical history and whether you're a smoker or not)
  • Occupation (whether you're a white-collar worker in a desk job or a blue-collar worker in a higher-risk industry, such as construction or truck driving)
  • Participation in high-risk activities or hobbies

Typically, the higher your risk of illness or injury, the higher your premiums are likely to be. Plus, decisions you make about the length of your benefit period can also impact how much you'll pay in premiums.

If you’re wondering, 'is income protection tax deductible?' It is in some situations! According to the Australian Taxation Office (ATO), you can claim the cost of your premiums for a policy purchased directly (and not through your superannuation fund), against any loss of income as a tax deduction in your next tax return but keep in mind that you must also include any payment you receive under the policy for loss of your income in your tax return. Make sure to seek the advice of a financial professional when it comes to tax!

How to conduct an income protection insurance comparison

Looking for the best income protection insurance to suit your needs?

Before you buy income protection insurance, weighing up your options is essential. Dive into this guide to compare policies and find the income protection insurance for you.

  • Review all features and exclusions: It's essential you know exactly what your income protection insurance covers and what's excluded. For example, benefits typically won't be paid if your injury or illness is the result of an intentional self-inflicted act, attempted suicide, normal pregnancy or engaging in any criminal activities.
  • Assess the benefit period: Review how long your income protection insurance payments will last. Your monthly benefit will only run for a specific period of time, and you'll likely pay a higher premium if you opt for a longer benefit period. Income protection policies may offer a set benefit period such as two or five years, or up to a specific age (such as 65).
  • Clarify the waiting period: The time between submitting your claim and receiving your first benefit is known as the waiting period. If getting your benefits paid sooner is a priority, it's worth looking for a policy that offers a short waiting period.
  • Check the maximum cover: This explains the maximum level of income covered by your policy, capping how much your monthly benefit payment can be. Income protection policies don’t cover 100% of your income as part of legislation requirements but can pay up to 90% of your pre-tax income for a period of 6 months and up to 70% of your pre-tax income thereafter for a period of time.

The easiest way to compare income protection insurance

To take the hassle out of gathering multiple quotes from different insurance brands, it can be helpful to turn to a free comparison service like Choosi. Choosi compares the features, benefits and premiums across a range of insurance products from insurance brands, saving you the time of doing the research yourself.

Choosi’s team of Choosers simplify the process by helping Australians compare, choose and apply for income protection insurance all in one place, helping you discover a policy that suits your needs, budget and lifestyle.

Ready to weigh up your income protection insurance options? Compare online now or by calling us on 1300 363 526.


Choosi doesn’t compare all brands in the market. This information is general only; it doesn’t take into account your personal objectives, financial situation or needs and shouldn’t be relied upon as advice. You should consider the relevant Product Disclosure Statement (PDS) and Target Market Determination TMD) available on this website for more information and to ensure the product suits your needs. If you have legal, tax, or financial questions, you should consult an appropriate professional.