At a glance:

  • Any level of earners can benefit from income protection (IP) insurance
  • A key reason for the review of income protection is the concurrent changes in how people work


Most people who have sole income from one profession strive for passive income or income from investments.

Can an income protection insurance policy assist you in achieving your income goals?

The income earned from employment or self-employment is a significant source to cover living expenses, debt service, or funding for future money-making strategies.

As a result, if you don’t implement appropriate protection strategies, an illness or injury could leave you unable to work and may negatively affect your lifestyle.

Income protection (IP) insurance can be just as important for high-income earners as it is for everyday Australians, barring those with significant net wealth or a large percentage of their income coming from investments.

Consider what it would be like if an injury or illness prevented you from working in your professional field. Despite that, you were medically cleared to work in a call centre or stock shelves at a supermarket.

Income Protection policies are designed to cover your usual occupation.

The amount you claim will be affected by your other income. There are many Australians who build assets to enhance their lifestyle or support their future. An individual does not always need a salary because they get income from their investment property.

The amount that can be claimed under income protection policies will consider some forms of passive income.

An important advantage of passive income is the continuity it offers you and your family. Frequently you do not have to work for your passive income. This means that even if you no longer participate, the income will continue.

Due to this, your family may not have to worry about financial security even if you you can no longer perform the activities required in your usual occupation.

In most cases, IP insurance only covers income derived from your labour – commonly known as ‘personal exertion’ income. Personal exertion income is the lost wages, salary, or business revenue that he or she would have earned had they been physically able to work. Alternative forms of income are usually called passive incomes.

It refers to income generated from assets that require no active management, such as listed shares or interest on bank accounts. In general, this income is not something that needs to be insured, since it is not something that should stop simply because you are unwell and can no longer work.

Go to the Aspect website for more information on income protection insurance and its relationship to various incomes. With over 40 years of collective experience, Aspect Underwriting can deliver positive outcomes to its clients. The goal of the team is to provide products and services that satisfy the needs of every client.

Mike Wallis

Mike has over 25 years experience, having spent his first seven years working as a Broker at Jardine Lloyd Thomson in Melbourne and in 2002 was transferred to JLT’s Accident and Health Department in London. For four years (2002 – 2005) Mike was a specialist A&H Lloyd’s Broker and during this time developed excellent relationships with the Lloyd’s A&H underwriting fraternity. In 2006 he returned to Australia in a senior broking position with overall responsibility for Placement Strategy, including the implementation of underwriting facilities and the various authorities granted by Lloyd’s. Mike was the underwriter at two specialist Underwriting Agencies prior to founding Aspect Underwriting in 2016.