Calculating income protection insurance


What should I consider?

Income protection insurance provides an income if you are sick or injured and unable to work for an extended period. But how much cover do you need?

Doing the sums on income protection insurance is not difficult. You will need to consider what your unavoidable expenses are and how long you can afford to wait without your income to meet them, should you suffer an injury or illness and be unable to work.

When deciding how much income protection insurance is right for you, one thing you should keep in mind is that you will not be able to cover your whole monthly income. For policies Choosi can arrange direct, you will generally be able to secure up to a maximum of 75% of your monthly pre-tax income, up to $10,000 per month* (a waiting period and benefit period applies).

How much income protection do I need?

In order to work out how much cover you require, consider your current financial circumstances by making a list of all your weekly living expenses and work out how much money you need each month as a minimum to get by, keeping in mind that different policies have different limits, including the maximum percentage of your gross income you can insure.

Consider expenses like:

  • Mortgage or rent
  • Credit card payments
  • Groceries
  • Car costs such as petrol, insurance and maintenance
  • Utilities such as electricity, water, gas, phone and internet
  • School fees
  • Other forms of insurance

How much will it cost me?

Your premium is determined by a number of factors including:

  • Your occupation
  • Your age, gender and smoking status at the time of the application
  • The benefit amount (selected by you)
  • The benefit period (selected by you)
  • The waiting period (selected by you)
  • Plus other factors such as your health, family history and participation in hazardous activities

Your waiting and benefit period explained

The waiting period is the amount of time you need to wait before your income benefit is payable. For policies Choosi can arrange direct, you can choose a 30-day or 90-day waiting period on your policy: generally, the longer you choose to wait, the lower your premiums will be.

Consider the amount of money you have in savings and your leave entitlements against your calculated monthly expenses to help determine the waiting period that is right for you.

The benefit period is the maximum amount of time you can continue to receive payments while you cannot work due to injury or illness and the insurer continues to accept your claim. For policies Choosi has on offer, you can choose a benefit period of six months, a year, two years or five years, depending upon your insurer.

Doing the sums on your expenses can help you find an income protection insurance policy that covers the financial necessities and has premiums that you can afford.

This is general information only and does not take into account your personal objectives, financial situation or needs. You should consider the relevant PDS available on this website prior to purchasing any product. Choosi offers insurance products from a range of brands but does not compare all products available in the market.

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