Income Protection Insurance Premiums – Why You Pay, What You Pay

Income Protection Insurance Premiums

If you are involved in an accident or become seriously ill to the point of not being able to carry out your duties at work, income protection insurance ensures that you are able to meet your expenses.

You get an income stream that is normally about 75 percent of your gross salary to act as replacement income until you are able to go back to work or until your benefit period expires.

The cost of this type of insurance is found in the premiums you are required to pay. It is important to be aware of the factors that are considered when setting your premium rates.


Income protection insurance premiums vary considerably across the market depending on the level of protection you are willing to pay for. For instance, the amount of salary you want to insurance you will a significant factor when setting your premium rates. Generally, the amount you will have to pay as income protection insurance premiums in one year is equal to one week’s salary or 2 percent of your annual salary.

Personal details

In addition to the coverage amount, your age will also be considered during the underwriting process of your income protection policy. Older insurance buyers are generally considered a greater insurance risk, which is why the cost of obtaining cover generally increases as you grow older. Your gender and health status, including pre-existing medical conditions are also considered. Women generally get better rates, and pre-existing medical conditions may be excluded from cover or you may have to pay more for the cover as a result. Smokers also pay more in premiums compared to individuals who don’t smoke. Your occupation may also affect the rates you receive depending on whether the insurer considers you a greater risk because of your job.

Waiting period and benefit period

When taking out your policy, you will decide how long your waiting period will be, as well as the length of the benefit period. Waiting periods can be anything from 2 weeks to 2 years, while the benefit period may be between 2 years and 5 years, or even until you turn 65. A longer waiting period translates to lower income protection insurance premiums, while longer benefit periods increase the premium amounts. Note that your waiting period will probably be dependent on how much you have in savings to replace your premiums before you require income protection benefits.

Other considerations

Many income insurance providers usually offer additional policy features that are optional. Any additional features above your basic policy will increase the cost of cover. It is also worth noting that income insurance premiums are usually low when you obtain income protection through superannuation. In addition, income protection premiums are tax deductible whether you buy a retail policy from an insurance company or obtain cover through superannuation.

Ultimately, your priority should be to get adequate cover to suit your personal circumstances at an affordable cost. You can speak to an insurance specialist or your financial planner regarding what an affordable income insurance policy for your would be. You can also visit us for income protection products, using online quotes can also be helpful when determining how much it will cost you to get income protection.