Compare income protection insurance in Australia

How income protection insurance works

Income protection pays you a monthly benefit if illness or injury stops you working. Moneysmart describes it as replacing a percentage of your pre-tax income, based on what you earned in the 12 months before you became ill or injured. Each policy has its own definition of disability and conditions you must meet before you can claim.

Three settings shape every policy: the benefit amount (a percentage of your income, within APRA's caps for new policies), the waiting period before payments start, and the benefit period they last for. Most policies also pay a partial benefit if you can go back to work in a reduced capacity, so you aren't worse off for trying to return.

It covers you whether the illness or injury happened at work or not, and it's separate from workers compensation, which only covers work-related injury and illness for employees. Policies commonly reduce payments by other income for the same period, such as workers compensation or sick leave, so you aren't paid twice.

What changed in 2020 and 2021

After years of heavy losses on income protection, APRA told life insurers to redesign it. The measures took effect in two steps, ending agreed value policies from 31 March 2020 and changing how every new policy is built from 1 October 2021. If you are reading an older article, or holding an older policy, this is why the details may not match what you are offered today.

Agreed value policies fixed your benefit at application, based on income you proved then. New policies are what the industry calls indemnity value: the benefit is set by your income when you claim. That protects the insurer from paying more than you have lost, and it means a drop in income before a claim reduces your benefit. People who still hold an agreed value policy should be careful about replacing it.

Waiting periods and benefit periods

These two choices move the premium more than anything else you control. A 90-day waiting period costs noticeably less than a 30-day one, because most short absences never reach the insurer. A benefit period to age 65 costs more than two years, because it covers the rare long claims that do the real financial damage.

Choose the waiting period by counting what you could live on: accrued sick and annual leave, savings, a partner's income. Choose the benefit period by thinking about the serious scenarios (cancer treatment, a back injury, a mental health condition) rather than a few weeks off. A short benefit period protects you from the common claim and not the catastrophic one.

Own occupation, any occupation and partial disability

The definition of disability decides whether you're paid. An own-occupation definition asks whether you can do the important duties of your own job. Stricter definitions ask whether you can do any job suited to your education, training or experience. APRA named a stricter definition after a claim has run for a set time as one of the controls insurers can use on long benefit periods, so many new policies change the test partway through a long claim. Read what happens after the first two years.

Check the partial disability terms too. If you can work part-time or in lighter duties, a partial benefit tops up your reduced income. Moneysmart notes some policies only cover people who work a minimum number of hours, giving 15 hours a week as an example. Casual and part-time workers should check that rule first.

How your occupation and hours affect cover

Insurers ask about your job and income as well as your health, and your occupation affects both what you can get and the price. Manual and hazardous work usually costs more to insure than office work. One direct insurer's product page, for example, offers income protection to people aged 19 to 60 (age next birthday), subject to their occupation.

Hours matter too. Moneysmart says some policies only cover you if you work a minimum number of hours, giving 15 hours a week as an example, and one insurer's 2026 TMD requires at least 20 hours a week. Casual, part-time and seasonal workers should check this rule before anything else.

Each policy also sets a maximum benefit and the age at which cover ends. The same direct insurer covers up to 70% of monthly income, with benefit periods of 1, 2 or 5 years or to age 65. Check the PDS for the limits that apply to you, and make sure the occupation on your application describes the work you actually do.

What income protection doesn't cover

Every policy lists its exclusions in the PDS. Moneysmart's examples are illness or injury arising from self-inflicted injury, something illegal you've done, or active military service, and it suggests asking whether there are limits for pre-existing conditions or risky activities. One insurer's 2026 target market determination shows how a real policy words them:

• Intentional self-inflicted injury or attempted suicide in the first 13 months of the cover, or of an increase.
• A normal and uncomplicated pregnancy, miscarriage or childbirth.
• Taking part in criminal activity, imprisonment, and war.
• Being banned, deregistered or restricted from your occupation by a professional or industry body.
• Sickness or injury that started before the cover, unless you disclosed it and the insurer agreed to cover it.
• Not having earned any income in the 12 months before you became disabled: that policy then treats your pre-disability income as zero, so no monthly benefit is payable.

Inside super or outside super

Most super funds offer income protection, and some include it by default. It's convenient and can be cheaper, but benefit periods and features are set by the fund, and premiums come from your retirement savings. A policy you own outside super costs you cash, but gives you a tax deduction and usually more choice. Income protection through super goes through the trade-offs in detail.

Is income protection tax deductible?

Yes, when you pay the premiums yourself outside super. The ATO says premiums for insurance against the loss of your salary or wages are deductible, and in myTax you claim them under Other deductions. Premiums paid through super aren't deductible to you, and neither is the part of a policy that pays a lump sum for injury. The flip side is that the payments you receive are taxable income. The full rules are on is income protection tax deductible.

If you're self-employed

Sole traders, contractors and business owners have no sick leave and usually no workers compensation, so income protection matters more for them. After APRA's changes, insurers work out a variable income by averaging it over a period suited to your occupation, and APRA says income should come from your personal exertion. Your tax returns and financial statements decide the benefit. A separate business expenses policy can cover the fixed costs of the business. See income protection for the self-employed.

How much income protection do you need?

Moneysmart's advice is to start with a budget. Work out your monthly costs, including the mortgage or rent and any super contributions you want to keep up, then subtract what would keep coming in: a partner's income, savings you could draw on, investment income and any other cover such as trauma insurance. The gap is the income to protect, up to the maximum the insurer allows.

Don't aim for the maximum by reflex. A benefit you can't afford to keep paying for is worth less than a smaller one you'll still hold in ten years. Adjusting the waiting period is usually a better way to control the premium than cutting the benefit period. The estimator below runs the sum and applies APRA's limits.

What makes an income protection policy the best for you

There isn't one best income protection policy in Australia, so when people ask which is best, the honest answer is the one that pays on your kind of claim, for long enough, at a premium you'll still afford in ten years. These are the criteria to judge it on, and they're the ones we use whenever this page talks about a better or worse policy.

Income protection features compared across direct insurers (PDS, as at October 2026)

The table sets out what nine products you can buy direct say about their limits, read from each current PDS. It shows the shape of each product, not its price, which depends on your age, job, income and health. Nine products are not the whole market, and we don't rank them: the order is alphabetical.

Several brands share an issuer. Budget Direct, nib and NobleOak's own Premium Life Direct are all issued by NobleOak Life Limited, with the same benefit limits, waiting periods and entry ages (Budget Direct's PDS offers no benefit period to age 65). Medibank and ahm are both issued by Zurich Australia Limited, and differ mainly in Medibank's higher $12,500 limit for people aged 18 to 50.

Who issues the income protection sold by banks, health funds and retailers

Most income protection sold under a bank or health fund brand is issued by a separate life insurer, and the issuer is the company that assesses and pays your claim. CommBank's income protection, for example, is issued by AIA Australia, and Medibank's and ahm's by Zurich Australia. Check the issuer on the PDS, then look it up in Moneysmart's life insurance claims comparison tool.

How to compare income protection

Put quotes side by side on the same benefit, waiting period, benefit period and premium structure, then work through these.

• Disability definition, including whether it changes after a set time on claim.
• Income definition, especially if you're self-employed, paid commission or bonuses, or on parental leave.
• Offsets: which other income reduces your benefit.
• Exclusions: pre-existing conditions, and any exclusion added after underwriting. Under the Life Insurance Code of Practice, new products shouldn't carry a blanket mental health exclusion in their general terms, though one can be applied to you after underwriting.
• Premium structure: stepped premiums (Moneysmart now says variable age-stepped) rise with age; level premiums (variable) rise more slowly. Neither is guaranteed.
• Indexation: whether the benefit rises with inflation, and your option to decline increases.
• Claims record: Moneysmart's claims comparison tool shows each insurer's income protection claim acceptance rate, claim times and disputes.
• Claim timeframes: insurers bound by the Life Code commit to deciding income-related claims within two months of receiving them or of the end of the waiting period, unless circumstances beyond their control apply.

Making an income protection claim

Tell the insurer, your super fund or your adviser as soon as you know you'll be off work for longer than your waiting period. You can lodge before the waiting period ends: insurers that follow the Life Insurance Code of Practice commit to deciding income-related claims within two months of receiving them, or of the end of the waiting period if that's later. Moneysmart lists what insurers ask for: medical reports and test results, details of your work duties and hours, and payslips and tax returns, or financial statements if you're self-employed. If you stay unable to work, expect regular assessments and progress claim forms.

Payments are made monthly in arrears. One direct insurer's product page says that with a 4-week waiting period, the first monthly payment arrives around the end of the second month after the waiting period started. Build that gap into the savings you plan to live on.

Insurers that follow the Life Code also commit to giving you a primary contact person during an income-related claim, updating you at least every 20 business days, and telling you at least three months before your benefit period ends or before a different disability definition starts to apply. If a claim is declined, they commit to giving you their reasons in writing. Complain to the insurer or fund first, then to the Australian Financial Complaints Authority (AFCA), which is free.