Income protection insurance pays a monthly benefit if you’re unable to work due to illness or injury. Depending on the policy and jurisdiction, it typically replaces up to 75–90% of your pre-tax income, helping you cover living expenses, mortgage payments, and bills while you recover. It’s distinct from TPD (total and permanent disability) and critical illness cover — which pay lump sums rather than ongoing income.
What it covers
- Monthly income replacement during illness or injury
- Coverage for both physical and mental health conditions
- Payments continue until you return to work or the benefit period ends
- Can cover you in your own occupation or any suitable occupation
- Premiums may be tax-deductible (varies by country)
- Rehabilitation support and return-to-work programs
What it doesn’t cover
- Voluntary unemployment or redundancy
- Pre-existing conditions not disclosed at application
- Injuries from illegal activities
- Normal pregnancy (complications may be covered)
- Claims arising within the waiting period
How to choose
Compare waiting periods (30, 60, or 90 days before benefits start) and benefit periods (2 years, 5 years, or to age 65 or 70). The longer the waiting period, the lower the premium. Choose “own occupation” cover if your job is specialized. Consider whether you already have income protection through your employer or superannuation fund.