What affects the cost of income protection?
The cost of income protection is influenced by a number of factors, including age, gender, smoking status, and occupation. The cost associated with each factor is typically based on the type of occupation, with those in more manual occupations generally at greater risk of illness or injury.
The best thing about the premiums for income protection held outside of superannuation is that they are generally tax deductible. Of course, individual circumstances can be different, so seek professional taxation advice if in doubt about your situation. Find out more about the tax deductibility of income protection premiums here.
Looking for an income protection policy? Here’s a snapshot of income protection policies on Canstar’s database available for a non-smoking, male aged 30-39.
The table above shows a snapshot of income protection policies on Canstar’s database available for a non-smoking, male, doctor/GP aged 30-39. This table is sorted by Star Rating (highest to lowest) then by provider name (alphabetically).
The table above shows a snapshot of income protection policies on Canstar’s database available for a non-smoking, male, electrician aged 30-39. This table is sorted by Star Rating (highest to lowest) then by provider name (alphabetically).
The table above shows a snapshot of income protection policies on Canstar’s database available for a non-smoking, male, HR Manager aged 30-39. This table is sorted by Star Rating (highest to lowest) ten by provider name (alphabetically).
For a tailored comparison tailored to your occupation click here.
Why do women pay more for income protection?
Statistically, females are more likely to claim on income protection, with more claims relating to mental health and nervous system issues. Also, they have claims related to pregnancy and genito-urinary tract. On the other hand, males have higher accident rates. Female cancers also typically occur at younger ages than male cancers. Females have been on claims in the past longer than males – on average, a female will be on a claim for 158 days compared to 118 days for a male (2002 Report of the Disability Committee, Institute of Actuaries of Australia).
Looking for an income protection policy? Here’s a snapshot of income protection policies on Canstar’s database available for a non-smoking, female aged 30-39.
The table above shows a snapshot of income protection policies on Canstar’s database available for a non-smoking, female, doctor/GP aged 30-39. This table is sorted by Star Rating (highest to lowest) then by provider name (alphabetically).
The table above shows a snapshot of income protection policies on Canstar’s database available for a non-smoking, female, electrician aged 30-39. This table is sorted by Star Rating (highest to lowest) then by provider name (alphabetically).
The table above shows a snapshot of income protection policies on Canstar’s database available for a non-smoking, female, HR Manager aged 30-39. This table is sorted by Star Rating (highest to lowest) ten by provider name (alphabetically).
For a tailored comparison tailored to your occupation click here.
How much does income protection cost?
The Canstar Research team has calculated the average monthly premiums for non-smoking male and female workers. The first table is for a 27-year-old and the second table is for a 52-year-old.
For the purposes of comparison, our ratings consider $3,125 cover per month (based on 75% of an annual income of $50,000), and $6,250 cover per month (based on 75% of an annual income of $100,000).
27-year-old non-smoker’s average premium cost for direct income protection
As you can see from the table below, income protection insurance is typically more expensive the more physical work is involved in an occupation, with cleaners and waiters facing higher premiums on average.
| Average Monthly Premiums for a 27-year-old Non-Smoker by Occupation | ||||
|---|---|---|---|---|
| Monthly Benefit of $3,125 | Monthly Benefit of $6,250 | |||
| Occupations | Male | Female | Male | Female |
| Accountant | $41 | $50 | $80 | $98 |
| Clerk | $44 | $54 | $85 | $104 |
| Retail Manager | $48 | $58 | $92 | $112 |
| Receptionist | $44 | $54 | $85 | $104 |
| Store Person | $46 | $56 | $88 | $107 |
| Sales Representative | $49 | $59 | $94 | $113 |
| Sales Assistant | $55 | $64 | $105 | $125 |
| Secondary School Teacher | $56 | $67 | $108 | $130 |
| Registered Nurse | $64 | $75 | $122 | $145 |
| Chef | $76 | $91 | $147 | $177 |
| Truck Driver | $85 | $102 | $163 | $196 |
| Electrician | $79 | $94 | $153 | $183 |
| Car Mechanic | $82 | $97 | $158 | $188 |
| Checkout Operator | $76 | $92 | $147 | $177 |
| Waiter | $73 | $86 | $139 | $166 |
| Commercial Cleaner | $92 | $109 | $176 | $211 |
| Source: Canstar 2018 Direct Income Protection Star Ratings. Based on policies rated by Canstar in 2018. Monthly benefit amount of $3,125 is based on 75% of monthly income for an annual income of $50,000. Monthly benefit of $6,250 is based on 75% of monthly income for an annual income of $100,000. Quotes are based on a 28 or 30 day waiting period and benefit period of 2 years. | ||||
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52-year-old non-smoker’s average premium cost for direct income protection
As this table shows, income protection insurance typically becomes more expensive as you age.
| Average Monthly Premiums for a 52-year-old Non-Smoker by Occupation | ||||
|---|---|---|---|---|
| Monthly Benefit of $3,125 | Monthly Benefit of $6,250 | |||
| Occupations | Male | Female | Male | Female |
| Accountant | $104 | $149 | $201 | $289 |
| Clerk | $112 | $161 | $217 | $312 |
| Retail Manager | $122 | $173 | $234 | $336 |
| Receptionist | $112 | $161 | $217 | $312 |
| Store Person | $119 | $169 | $228 | $326 |
| Sales Representative | $125 | $175 | $240 | $340 |
| Sales Assistant | $141 | $195 | $271 | $377 |
| Secondary School Teacher | $149 | $204 | $288 | $394 |
| Registered Nurse | $166 | $227 | $319 | $439 |
| Chef | $192 | $270 | $373 | $527 |
| Truck Driver | $228 | $314 | $434 | $603 |
| Electrician | $203 | $281 | $393 | $547 |
| Car Mechanic | $212 | $292 | $407 | $567 |
| Checkout Operator | $201 | $280 | $385 | $539 |
| Waiter | $193 | $265 | $368 | $508 |
| Commercial Cleaner | $242 | $335 | $464 | $646 |
| Source: Canstar 2018 Direct Income Protection Star Ratings. Based on policies rated by Canstar in 2018. Monthly benefit amount of $3,125 is based on 75% of monthly income for an annual income of $50,000. Monthly benefit of $6,250 is based on 75% of monthly income for an annual income of $100,000. Quotes are based on a 28 or 30 day waiting period and benefit period of 2 years. | ||||
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Why income protection can be worth considering
When you’re off work, if you’ve used up all of your sick leave or other available leave, and you’re not eligible for workers’ compensation, you can find yourself under financial strain. There are many expenses that keep coming regardless of whether you’re earning money or not that need to be considered.
We’ve provided some examples of the monthly expenses you could expect to face while you’re off work. The tables below make the following assumptions about your spending habits while you’re off work:
- Not paying interest on a credit card balance
- Includes car loan; no other debts
- No savings goals at present
- Non-smoking
- Non-drinking
- No children
They also do not include expenses for discretionary purchases, such as buying takeaway meals, expensive hobbies, buying new clothes, paying for a haircut or new make-up or going to the gym.
Expenses you could expect to pay while you’re off work
| Expense | Typical cost | Cost per month |
|---|---|---|
| Rent / Mortgage | $400/week | $1,733 |
| Broadband Internet | $70/month | $70 |
| Mobile Phone | $60/month | $60 |
| Car Insurance | $800/year | $67 |
| Home and Contents Insurance
(excluding North Queensland) |
$950/year | $79 |
| Health Insurance | $3,489/year | $291 |
| Car Loan at 8.99% | $311/month | $311 |
| Groceries | $150/week | $650 |
| Pharmaceutical Medicines | $50/month | $50 |
| Pet Expenses and Vet Bills | $200/month | $200 |
| Petrol / Public Transport | $40/week | $173 |
| Estimated usual monthly expenses |
$3,684/month | |
| Source: Canstar Budget Planner Calculator. | ||
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Get the right income protection policy
It seems clear that income protection insurance is worth considering, so how do you choose the right policy for you? We’ve made it easy for you to find insurance that provides outstanding value. In 2018, Canstar compared 16 direct income protection insurance policies from 14 providers.
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Find out more about direct income protection with our latest star ratings report:
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