At a glance:
- Income protection insurance costs vary depending on the age, gender, lifestyle and health of a policyholder.
- The average cost of income protection insurance in Australia is close to $72 per month, but it will vary depending on the various factors mentioned above. Most income insurance policies have a 90-day waiting period.
Income protection insurance is a safe hedge against the loss of income or working ability caused due to injury or illness. An income protection insurance policy in Australia replaces a portion of an individual’s income in case they are unable to work. It can cover expenses during the recovery period, thus providing temporary financial relief. It should not be confused with TPD insurance, which is designed for permanent disabilities.
Various factors affect the cost of income protection insurance, such as the level of coverage, waiting period, benefit period, and age of the policyholder. In this article, we will take a detailed look at the cost of income protection insurance in Australia.
How is the Cost of Income Protection Insurance in Australia Calculated?
In Australia, the expense of income protection insurance is determined by multiple factors, including the extent of coverage, waiting period, benefit duration, the policyholder’s age, as well as their health status and occupation. The coverage level is part of your income you would like to be covered in case of income loss. The waiting period for income protection insurance refers to the anticipated time between when the policyholder suffers an illness or injury and the beginning of the benefit payment. The benefit period specifies the length of time that the policyholder will receive benefits.
Factors Affecting the Cost of Income Protection Insurance in Australia
Age:
The cost of income protection insurance in Australia is higher for older people as they are more likely to experience health issues that can prevent them from working.
Occupation:
The cost of income protection insurance in Australia can also vary based on the policyholder’s occupation. Those employed in high-risk professions like construction workers, miners, and firefighters are more likely to have higher premiums than individuals working in low-risk occupations such as office workers.
Lifestyle Habits:
Lifestyle habits such as smoking may affect the cost of income protection insurance in Australia. Differences in gender matter with respect to lifestyle.
Waiting Period:
The waiting period is the time period between the policyholder’s illness or injury and the start of the benefit payment. The longer the waiting period, the lower the premium.
Benefit Period:
The benefit period is the duration of the benefit payment. The longer the benefit period, the higher the premium.
Average Cost of Income Protection Insurance in Australia
According to a survey conducted by Finder, the average monthly cost of income protection insurance in Australia is $71.93. However, this cost can fluctuate based on the above-mentioned factors.
As per the survey, the average monthly cost of income protection insurance for a 30-year-old non-smoking male with a $4,000 monthly benefit and a 90-day waiting period is $57.50. In comparison, the average monthly cost of income protection insurance for a 30-year-old non-smoking female with a $4,000 monthly benefit and a 90-day waiting period is $82.46.
It is also noteworthy that the policyholder’s occupation can significantly impact the cost of income protection insurance. For instance, the average monthly cost of income protection insurance for a 30-year-old non-smoking male office worker with a $4,000 monthly benefit and a 90-day waiting period is $53.96. However, for a 30-year-old non-smoking male construction worker with the same benefit and waiting period, the average monthly cost of income protection insurance is $86.14.
Additional Costs and Exclusions in Income Protection Insurance
It is important to note that income protection insurance policies can have additional costs, and there are exclusions that policyholders should be aware of prior to purchasing the product. We always recommend that you read the Product Disclosure Statement (PDS) of the income protection insurance you favour before finalising your purchase.
Tips for Choosing the Right Income Protection Insurance Policy
If you are considering purchasing an income protection insurance policy in Australia, here are some tips to help you choose the right one:
Determine your needs:
Before you start looking for a policy, take the time to assess your needs. Consider factors such as your current income, financial obligations, and any dependents you may have. This will help you determine the amount of coverage you need and the length of the benefit period.
Compare policies:
There are many income protection insurance policies available in Australia, and they vary in terms of coverage, benefit period, waiting periods, and cost. Make sure you compare policies from different providers to find the one that best meets your needs and budget.
Look for a reputable provider:
Choose a provider that has a good reputation in the industry and a history of paying claims. You can check online reviews or ask for recommendations from friends or family.
Consider the waiting period:
The waiting period is the amount of time you must wait after becoming ill or injured before you can start receiving benefits. The longer the waiting period, the lower the premiums, but you should also consider how long you can afford to be without income.
Understand the benefit period:
The benefit period is the length of time you can receive benefits if you are unable to work due to illness or injury. Make sure you choose a benefit period that provides adequate coverage until you are able to return to work or retire.
Check for exclusions:
Some policies may have exclusions for certain types of illnesses or injuries. Make sure you read the policy carefully to understand what is covered and what is not.
Consider the cost:
As income protection insurance can be costly, it’s crucial to select a policy that fits within your budget. To make it more affordable, you could contemplate modifying your waiting period or benefit period to reduce the premiums or insure a smaller amount of your income. This can help you obtain the coverage you require while keeping the cost within your budget.
Seek professional advice:
If you are unsure about which policy to choose, consider seeking advice from a financial adviser or insurance broker. They can help you understand your options and find the policy that best meets your needs.
Conclusion
If you are still uninsured and the thought of losing your job or source of income gives you jitters, it’s time to get an instant income protection insurance quote without any hassles. Aspect UW can assist you in safeguarding your income and securing your future by providing an insurance plan tailored to your specific needs, offering protection against unforeseen events. Get an immediate income protection insurance quote by contacting us now.
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.
