Income Protection

Life is unpredictable. An illness, injury, or unexpected event can suddenly stop you from working and earning a living. While medical bills can be stressful enough, the loss of regular income often creates the biggest financial strain for individuals and families. That’s where income protection insurance comes in.

What is Income Protection Insurance?

Income protection is a type of insurance that pays you a regular benefit if you are unable to work due to illness or injury. Unlike Workcover (which only applies to work-related injuries), income protection can cover you for a much broader range of health issues—whether they happen at work, at home, or elsewhere.

How Does It Work?

• Benefit Payments – Usually, up to 70–75% of your pre-tax income is paid monthly while you’re unable to work.

• Waiting Period – This is the time you need to be off work before payments start (commonly 14, 30, or 90 days).

• Benefit Period – How long payments continue (e.g., 2 years, 5 years, or until age 65, depending on your policy).

  
  

What Does Income Protection Cover?

Most policies cover a wide range of illnesses and injuries that stop you from working, such as:

• Back injuries

• Cancer treatment

• Heart disease

• Mental health conditions

• Serious accidents

Some policies also offer optional extras, such as rehabilitation benefits or partial payments if you can only return to work part-time.

Workcover vs. Income Protection

It’s important to understand how these systems interact:

• Workcover – Covers workplace injuries and provides medical, wage, and rehab support, but only if the injury is work-related.

• Income Protection – Covers you for non-work-related injuries and illnesses (e.g., sporting injuries, chronic illnesses, or conditions that develop outside work).

  
  

Many people rely on Workcover alone, but having income protection ensures you’re covered in all situations—not just those tied to your job.

Who Should Consider Income Protection?

• Self-Employed Workers – Without sick leave or employer support, income protection is crucial.

• High-Income Earners – Especially those with mortgages or dependents relying on their income.

• Families with One Main Income Earner – Where losing that income would have a significant impact.

• Anyone Without a Large Safety Net – If you don’t have months of savings set aside, income protection provides peace of mind.

  
  

Benefits of Income Protection

• Maintains your lifestyle and financial commitments while you recover.

• Reduces stress about bills and living expenses.

• Helps protect your family’s financial security.

• Complements Workcover and other insurances (like TPD or life insurance).

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Key Takeaway

Income protection insurance is about protecting your paycheck when you can’t work. While Workcover is there if you’re injured on the job, income protection fills the gap for everything else. By ensuring a steady income during recovery, it provides stability and peace of mind when life takes an unexpected turn.