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Do I need income protection insurance?

Is income protection insurance worth it?

Income protection insurance may be worth considering if you rely on your income to pay your bills and maintain your lifestyle, whether you work for an employer or are self-employed.

The purpose of income protection insurance is to provide you with a regular payment to replace lost income if you can’t work because you’re sick or injured. It can come in handy if you need time off work beyond the personal leave you’re entitled to.

Life can be unpredictable, and an unexpected sickness or injury could cause a lot of sudden changes in your life, such as disrupting your financial stability. That’s where income protection insurance can help. It pays a monthly benefit to help cover your expenses, so you can focus on recovering and your return to work.

Some examples of injuries and sickness you may be able to claim for loss of income, depending on your occupation, include:


  • Arthritis or rheumatoid arthritis
  • Cancer
  • Chronic obstructive pulmonary disease
  • Heart attack
  • Epilepsy
  • Mental illness
  • Parkinson’s disease


  • Amputation
  • Back injury
  • Brain injury
  • Broken arm or leg
  • Burns
  • Hearing loss
  • Nerve damage
  • Loss of vision

Exclusions terms and conditions apply.

What isn’t covered?

Just like other types of insurance, there are exclusions – things that aren’t covered, such as sickness or injury caused through an intentional or self-inflicted act, war or riot, engaging in criminal acts or associated with pregnancy or elective surgery, or if the sickness or injury first manifests itself prior to the date the policy commences. For more information, please read the Product Disclosure Statement.

Who needs income protection insurance?

Income protection insurance could be important for a range of people depending on their circumstances – whether young or old, single or married, responsible for children or pets, those just starting their career or those who are in a later stage of life.

Some things to consider when deciding if income protection insurance could be beneficial for you:

  • The amount of savings or other funds you have available to cover your household bills and other living expenses for a period of time, while you recover and get ready to return to work.
  • Whether you have a family or dependants that rely on your income for financial support.
  • Whether you have debts or bills that require regular payments, like a mortgage, utilities or groceries.
  • Whether you’re self-employed or work as a freelancer or contractor, and may not have any paid sick leave or annual leave.

Why do I need income protection insurance?

To work out if income protection insurance is right for you, it’s important to have a clear understanding of your financial situation.

Answering the questions below can help you determine whether you would be able to cover your expenses if you couldn't work.

Creating a personalised budget may also help you work out your monthly expenses and the income you'll need to replace, as well as which of the nice-to-have expenses you could cut out without compromising on your lifestyle.

  • What portion of your income do you use to pay your expenses?
  • Which of these expenses are necessities? For instance, groceries, utility bills, transport costs, school or higher education fees, rent, or mortgage.
  • Which of these expenses are nice-to-haves? For example, gym membership, streaming subscriptions, special interests or hobbies, takeaway or the cost of dining out, buying luxury items, family outings, art and culture excursions, and other entertainment.
  • What portion of your income is left over, after you pay your expenses?
  • Do you have other funds that could meet your expenses for an extended period of time if your income suddenly stops?

Speak to a financial advisor to determine if you need income protection insurance and how it could benefit you.

How much income protection insurance do I need?

Every person’s situation is different and once you’ve planned your budget, you can figure out how much income protection insurance you’ll potentially need.

Income protection insurance policies are designed to pay you a portion of your pre-tax income to help cover your living costs, but not the entirety of your income. For example, policies available directly through Choosi can cover up to 70% of your pre-tax income up to a maximum benefit of $15,000 per month.

The cost of income protection insurance can vary from person to person. Your premiums will be decided by factors such as the duties you perform at work, age, gender, smoker status, and the level of cover you would like to take out. Request a quote or get us to call you back.

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