Is income protection through super worth it?

It's better than nothing, but has limitations: benefit periods are usually capped at 2-5 years, definitions of disability may be narrower, and it's paid from your super balance (reducing retirement savings). For basic cover on a budget, super IP is fine. For comprehensive protection, a separate policy is better — and premiums are tax-deductible outside super.

What's the difference between 'agreed value' and 'indemnity'?

Agreed value: the insured amount is agreed when you take out the policy. Even if your income drops later, you receive the agreed amount. Indemnity: the benefit is based on your income at the time of claim. If your income has decreased, you receive less. Agreed value policies cost ~10-15% more but provide certainty.

Does income protection cover mental health?

Most modern policies cover mental health conditions (depression, anxiety, PTSD, etc.), but some have limitations — e.g., a maximum benefit period of 2 years for mental health claims even if the overall policy is 'to age 65'. Always check the PDS (Product Disclosure Statement) for mental health specific terms.

§ Tool · tier 1 · independent

Income Protection Calculator.

Calculate the right level of income protection insurance. See how much cover you need, waiting periods, benefit periods, and estimated premiums.

CalculatorFree, no signupOn-deviceupd May 2026

Inputs

Your numbers

Monthly Income (Before Tax)*

$8k

Your gross monthly income — most policies cover up to 75% of this

Essential Monthly Expenses*

$5k

Mortgage/rent, food, utilities, insurance, transport — the minimum to get by

Emergency Savings / Cash Buffer*

$15k

How much savings you have to cover expenses during the waiting period

Preferred Waiting Period*

Longer waiting period = cheaper premiums. You need savings to cover this gap.

Benefit Period*

How long benefits are paid if you can't work

Occupation Category*

Your occupation heavily influences premiums

Existing Income Protection Cover*

Check your super statement — many funds include basic IP cover

Your Age*

Age affects premium costs and available benefit periods

Math updates live as you change inputs · AI runs on submit

Awaiting inputs

Move the sliders or type in the form on the left — the math updates live as you go. Click Get AI verdict when you want a written analysis.

Your income is your most valuable asset — if you earn $100,000/year and have 30 years until retirement, that's $3 million in future earnings. Income protection insurance replaces up to 75% of your income if you're unable to work due to illness or injury. Unlike workers' compensation (which only covers work-related incidents), income protection covers you 24/7 — whether you're injured playing weekend sport, diagnosed with a serious illness, or suffer a mental health condition that prevents you from working.

§ Worked examples

Real-world scenarios

Office Worker, Family Provider

Alex, 38, earns $9,500/month. Essential expenses: $6,500/month. Has $20,000 in savings. No existing cover.

Recommended cover: $7,125/month (75% of income). Waiting period: 90 days (savings cover 3 months of expenses). Benefit period: to age 65. Estimated premium: ~$160-$220/month. Tax deduction (37% rate): ~$60-$80/month. After-tax premium: ~$100-$140/month — protecting $7,125/month of income.

Tradesperson, High Risk

Jake, 32, is a carpenter earning $7,000/month. Essential expenses: $4,500/month. Has $10,000 in savings.

As a heavy manual worker, premiums are higher. Recommended cover: $5,250/month. Waiting period: 60 days (savings cover 2 months). Estimated premium: ~$250-$350/month (heavy manual loading). Tax deductible at 30%: saves ~$75-$105/month. This is critical insurance for a tradesperson — a back injury could end a career.

§ FAQ

Questions Australians ask

§ Glossary

Plain-English definitions

Income Protection Insurance

Insurance that replaces up to 75% of your income if you can't work due to illness or injury. Also known as salary continuance or disability income insurance.

Waiting Period (Elimination Period)

The number of days you must be unable to work before benefits start being paid. Common options: 30, 60, or 90 days. Longer waiting period = lower premiums.

Benefit Period

The maximum length of time benefits will be paid for a single claim. Options range from 2 years to age 65. Longer benefit periods provide better protection against chronic conditions.

Agreed Value vs Indemnity

Agreed value: benefit amount is set at policy start. Indemnity: benefit is based on your income at claim time. Agreed value costs more but provides certainty.

§ Pair it with

Related tools

Life Insurance Calculator

Calculate death cover to complement your income protection.

TPD Insurance Calculator

Calculate Total & Permanent Disability cover for worst-case scenarios.

Emergency Fund Calculator

Build savings to cover the waiting period before IP benefits start.

How to use

01Enter your monthly income and essential expenses.
02Add your emergency savings (this determines the ideal waiting period).
03Choose your preferred waiting period and benefit period.
04Select your occupation category.
05Check if you have existing cover.
06See your recommended cover level and estimated premium.

Key info

Income protection typically covers up to 75% of your gross income (+ a 10% super contribution benefit).
Premiums for policies held OUTSIDE super are tax-deductible (a significant benefit).
The 90-day waiting period is the most cost-effective — premiums are 30-40% cheaper than 30-day.
'Agreed value' policies pay the insured amount regardless of actual income at claim time. 'Indemnity' policies pay based on income at claim time.

Pro tips

Income protection premiums are 100% tax-deductible when held outside super — this makes the after-tax cost much lower.
Choose a waiting period that matches your sick leave + savings. If you have 2 months of savings, a 60-day waiting period works well.
'To age 65' benefit period is essential for serious conditions. A 2-year policy is cheaper but leaves you exposed if you develop a chronic condition.
If budget is tight, get a policy with a 90-day wait and 'to age 65' benefit — it's cheaper than 30-day/2-year and protects against the worst scenarios.

Avoid these

Not having income protection at all — this is the most important insurance for working Australians.
Choosing a 2-year benefit period to save money — if you have a serious illness or injury, 2 years runs out fast. 'To age 65' protects against catastrophic scenarios.
Not realising premiums are tax-deductible outside super — this effectively reduces the cost by your marginal tax rate.
Having cover only through super — super fund IP policies often have shorter benefit periods, limited definitions, and may not cover pre-existing conditions.

Disclaimer: Estimates only. Interest rates, fees and policies change frequently. Always verify with lenders directly. General information, not personal financial advice.

Last updated · May 2026