Income Protection Insurance

Income protection insurance, also known as disability income insurance, provides monthly payments to replace your income if you're unable to work due to illness or injury. Unlike TPD insurance which pays a lump sum for permanent disability, income protection covers temporary disabilities and pays regular monthly benefits similar to a salary. Australian policies typically replace up to 75% of your pre-disability income (capped to remove incentive not to return to work), with payments subject to a waiting period (typically 14, 30, 60, or 90 days) before benefits commence. The benefit period - how long payments continue - ranges from 2 years to age 65, with longer benefit periods costing more but providing greater security. Income protection is tax-deductible when held outside superannuation (as premiums are paid from after-tax income and benefits are taxable), making it cost-effective for Australian taxpayers. The definition of disability can be 'own occupation' (unable to perform your specific job) or 'any occupation' (unable to perform any suitable work), with own occupation being more common and valuable. Many policies include partial disability benefits if you return to work in reduced capacity, plus additional benefits for rehabilitation expenses and business overheads. APRA regulates income protection providers, and ASIC oversees sales practices following industry reforms. Income protection is particularly important for self-employed Australians and professionals without sick leave entitlements. Premiums are based on age, occupation, health, income level, waiting period, and benefit period selected.