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How to Protect Your Paycheck

What is an Income Protection Plan?

An income protection plan is a type of insurance that pays out a monthly benefit to replace lost income if you are unable to work due to illness or injury. This coverage can help protect your financial stability and ensure that you have the funds needed to cover living expenses while you are unable to work.

Income protection plans, also known as disability insurance or income replacement insurance, is an essential type of coverage that can provide financial support in the event of an unexpected loss of income due to illness or injury. This article will cover everything you need to know about income protection plans, including what they are, how they work and why you may need one.

How Does an Income Protection Plan Work?

When you purchase an income protection plan you will pay a monthly premium to the insurance company. In return, if you become unable to work due to illness or injury, the insurance company will provide a monthly benefit for a set period of time.

The amount of coverage and length of time the benefits are paid out will vary depending on the specific plan you choose.

Why Do You Need an Income Protection Plan?

An income protection plan can provide financial security in the event of an unexpected loss of income. If you were to become ill or injured and unable to work, this type of coverage would ensure that you have a source of income to cover living expenses such as rent or mortgage payments, groceries and other essential bills. Without this coverage, you may struggle to make ends meet and could be at risk of falling into debt or losing your home.

Some of the most common reasons for needing an income protection plan include:

  • Self-employed individuals who do not have sick pay or disability benefits from an employer.
  • Those with a family or dependents who rely on their income to cover living expenses.
  • Individuals with a high level of financial commitments such as mortgages, loans or credit card debt.
  • Those in physically demanding jobs that may be at higher risk of injury.
  • Individuals with a pre-existing medical condition that could potentially affect their ability to work.

Understanding the Different Types of Income Protection Plans

There are several different types of income protection plans available, each with its own unique features and benefits. Some common types include:

  • Long-term income protection: This type of plan provides coverage for an extended period of time, usually until retirement age, and can provide a monthly income of up to 70% of your pre-tax earnings.
  • Short-term income protection: This plan typically provides coverage for a shorter period, usually between 1–2 years, and can provide a monthly income of up to 80% of your gross salary.
  • Accident and sickness only: This plan covers you for injuries or illnesses that prevent you from working, but does not provide coverage for other reasons such as redundancy.
  • Redundancy cover: This type of plan specifically covers loss of income due to being made redundant from your job.

It's important to carefully consider your needs and financial situation when choosing an income protection plan. Some factors to consider include the level of coverage provided, the waiting period before benefits kick in, and the length of coverage.

Best Income Protection Plan Providers in Australia

There are many insurance companies and providers offering income protection plans in Australia. Some top options to consider include:


Medibank is one of the leading health insurance providers in Australia, and they also offer income protection plans. Their plans provide coverage for up to 70% of your pre-tax income, with options for both long-term and short-term coverage. They also offer a range of optional add-ons such as redundancy cover. Plus, Medibank can also be a great choice even for those who have already been injured or are on a leave from work, as they offer cover for pre-existing conditions.

AIA Australia

AIA Australia is another top provider for income protection plans. They offer coverage for up to 70% of your gross salary and have options for both long-term and short-term coverage. They also provide additional benefits such as a rehabilitation program to help you get back to work quicker. AIA Australia also offers an optional add-on for redundancy cover.


Like Medibank and AIA Australia, TAL is competitive and offers up to 70% of your pre-tax income. They have both long-term and short-term coverage options, and add-ons for redundancy cover and rehabilitation programs. Additionally, TAL has a strong reputation for quickly processing claims and providing excellent customer service.

Final Thoughts

You never know what life may bring. Having income protection insurance provides peace of mind. With the options mentioned above, you can find the best income protection plan that suits your individual needs and budget.

It's important to carefully consider all coverage options and additional benefits offered by different providers before making a decision. In the end, investing in a good income protection plan can provide financial stability and support during unexpected events in life.