Benefit Amount

Benefit amount is the core payment feature of income protection insurance in Australia, representing the monthly income you'll receive if you're unable to work due to illness or injury. Australian income protection policies typically cover 70-75% of your pre-disability income, as this percentage is tax-effective (benefits are taxable, but premiums are tax-deductible). APRA regulations limit benefit amounts to ensure they don't exceed your actual income, preventing over-insurance and disincentivizing return to work. When calculating an appropriate benefit amount, you must consider your monthly expenses, existing savings, and any employer benefits. The benefit amount you choose directly impacts your premium - higher monthly benefits cost more. Most Australian policies define 'income' specifically, often including salary, commissions, and bonuses but excluding investment income. Self-employed Australians must provide financial statements proving their income level. The benefit amount may be reduced if you have other income sources while claiming (known as 'offset provisions'). Some policies offer indexation of the benefit amount, increasing it annually with inflation. Unlike lump sum insurance (sum insured), the benefit amount continues for the duration of your claim, up to the benefit period limit. Australian insurers must clearly explain how benefit amounts are calculated, when payments begin (after the waiting period), and how long they continue (the benefit period) in the PDS.