Your income is likely the financial lifeblood of your family. It probably puts food on the table and secures your family’s necessities. Losing the ability to earn an income can put your family in financial jeopardy.
Income protection insurance can replace up to 70% of your pre-disability income when you are unable to work due to illness or injury. If you are planning to take out this type of policy, you might be asking, “How much income protection do I need?”
In this article, we will help you determine the right amount of coverage you need for your income protection. At Curo Financial Services, we provide customised income protection advice to help Australians safeguard their income.
Key Takeaways
- Several factors affect how much Income Protection you need. It is highly personalised and tailored to your financial situation and goals.
- Income Protection insurance can temporarily replace a portion of your pre-disability income—when you are ill or injured.
- Individuals who rely on their income should consider taking out an Income Protection insurance.
Factors that influence your income protection benefit
When you are looking to get a cover, several factors can affect your income protection benefit, such as:
- Pre-disability/illness income: The level of your income before your disability can serve as the basis of your monthly benefits. This type of policy can replace up to 70% of your income.
- Other disability payments: Review your existing policies and other disability payments. This can reduce the amount of coverage you need, allowing you to save on premiums.
- Age and medical condition: Your current age must be within the covered period, and your medical condition disables you from earning an income.
- The amount you’re insured for: The amount you initially agreed on when you took out the policy.
What is Income Protection Insurance?
Income protection insurance is a type of life insurance policy that pays you monthly benefits when you become unable to work due to illness or injury. Typically, your policy benefit can pay up to 70% of your pre-disability monthly income until you are able to work or the benefit period ends—whichever comes first.
Key Factors for Income Protection Insurance
- The entry age for this policy is between 17 and 61 years old.
- The policy benefit is generally until the age of 65. However, the benefit period may change depending on your age or the nature of your work.
- You are subject to a waiting period before you can process a claim.
Who Needs Income Protection Cover?
Generally, individuals who rely on their income to meet their financial obligations need income protection. This includes:
- Every working individual who depends on their income to maintain their lifestyle, pay mortgage or rent, and cover daily expenses.
- Self-employed and small business owners who do not have standard employment benefits, such as paid sick or annual leave.
- Family breadwinners whose families rely on their income for financial security.
- Individuals with unpaid debts, such as mortgages, personal loans, and credit cards. Regardless of the inability to work, these will require ongoing payments.
- Stay-at-home parents and caregivers who have family responsibilities and home duties.
- Individuals in high-risk or physically demanding jobs where the risk of injury is high.
Our Advice for Getting the Right Income Protection Coverage
The right income protection coverage means having a balance between having a sufficient amount of benefit when you need it and paying premiums that are within your budget.
If you are looking for the optimal level of coverage, below is a quick guide to help you determine the right coverage.
The average of your income
You want your coverage to be sufficient to cover your current income and not too high to be a financial burden when paying the premiums.
You may use your average income over the last 12 months as a basis.
Work out what 70% of your income is
Typically, income protection insurance pays up to 70% of your pre-disability income. If your income has multiple sources, adding them and finding the average will help you determine the percentage that you need to cover.
Note: If you need higher coverage, you need to pay higher premiums.
Understand the effect of your occupation on premiums
Aside from your age and health condition, your occupation affects your policy premiums. When your work involves health or safety risks, the insurer may charge an additional fee on premiums as mitigation.
For example, when you work as a heavy equipment operator, the risk of getting into an accident that can cause your disability is higher than that of someone who is a lawyer. The insurer will take into consideration your work-related risks when quoting.
Applying for Income Protection Insurance
When you are ready to apply for income protection insurance, consider the following factors to ensure that you will get suitable cover for your needs.
Payment amount
The level of your premiums depends on several factors, such as:
- Your age,
- Terms of your policy, and
- Your occupation.
Customising the cost of premiums that work within your budget requires an understanding of your policy options and negotiation with the insurer. An expert income protection advisor will help you get multiple quotations and options for premiums.
Waiting period
Each income protection insurance has a different waiting period before receiving the benefits. Waiting period is the time between when you become disabled and when the payment starts—during which you will not receive any pay.
Note: Longer waiting periods have lower cost of premiums.
Benefit period
This is the duration for which your policy will continue to pay you as income replacement.
Note: Longer benefit periods have a higher cost of premiums.
Get the Right Income Protection Cover with Help from Curo
Determining the right amount of income protection cover can be challenging. You need to consider several factors that will affect your level of cover.
Curo Financial Services has been in the life insurance advice industry for decades. We have helped hundreds of Australians get the right income protection cover. Our customised approach in income protection advice has provided financial security to our clients in times of need.
If you want to explore your options, contact us. One from our team will reach out to you.
Frequently Asked Questions
How much of my income can I insure?
Typically, Income Protection insurance can pay up to 70% of your pre-disability income. Consulting an expert Income Protection insurance adviser can help you determine the optimal level of coverage.
How long can I receive payments from my Income Protection insurance?
In Australia, you can select your benefit period from 1, 2, or 5-year options, or for some insurers—until a defined age (60 or 65).
How does the benefit period impact coverage?
Generally, insurers will require higher premiums for policies with a longer benefit period to mitigate the risk of paying for an extended period.
General Advice Disclaimer
General advice warning: The advice provided is general advice only and in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.
Factual Advice Disclaimer
The information I have provided you is purely factual in nature and does not take account your personal objectives, situation or needs. The information is objectively ascertainable and, therefore, does not constitute financial product advice. If you require financial product advice you should consult a properly licensed or authorised financial adviser.
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Last Updated on February 10, 2026 by Brent Satill
