What Does Income Protection Insurance Cost in 2018?

What does direct income protection cost, and how can your occupation, age, gender, and lifestyle choices affect your insurance premiums?

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? Our selector has a wide range of occupations to choose from that tailor the results based on what you choose. The table below shows a snapshot of income protection policies for a Banking & Financial Services Manager. These results are based on a 40-49 year old male who is a non-smoker. 

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).

The table below displays a snapshot og life insurance options available for a non-smoking female aged 40-49 years old, who is working in a white collar occupation group such as a Professional Manager. This table is sorted by Star Rating (highest to lowest).

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

 

Average Monthly Cost for $3,125 month cover for 27-yo

Average Monthly Cost for $6,250 month cover for 27-yo

Occupations Male Female Male Female
Accountant $40 $49 $76 $94
Clerk $42 $53 $81 $101
Retail Manager $47 $58 $90 $111
Receptionist $42 $53 $81 $101
Store Person $47 $58 $88 $110
Sales Representative $47 $58 $89 $110
Sales Assistant $51 $62 $96 $118
Secondary School Teacher $50 $60 $95 $115
Registered Nurse $59 $71 $113 $137
Chef $70 $87 $134 $167
Truck Driver $82 $99 $157 $192
Electrician $76 $92 $144 $176
Car Mechanic $78 $95 $149 $182
Checkout Operator $68 $83 $131 $160
Waiter $74 $90 $143 $174
Commercial Cleaner $85 $104 $164 $200
Source: Canstar 2018 Direct Income Protection Star Ratings. Based on policies rated by Canstar in 2018.

Compare Direct Income Protection with Canstar

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

 

Average Monthly Cost for $3,125 month cover for 52-yo

Average Monthly Cost for $6,250 month cover for 52-yo

Occupations Male Female Male Female
Accountant $101 $145 $193 $280
Clerk $110 $159 $209 $304
Retail Manager $121 $174 $230 $333
Receptionist $110 $159 $209 $304
Store Person $122 $176 $232 $336
Sales Representative $124 $177 $235 $338
Sales Assistant $136 $190 $257 $362
Secondary School Teacher $132 $184 $254 $355
Registered Nurse $159 $220 $303 $424
Chef $181 $262 $347 $504
Truck Driver $219 $308 $418 $593
Electrician $199 $280 $380 $538
Car Mechanic $207 $291 $394 $558
Checkout Operator $181 $254 $347 $491
Waiter $197 $277 $378 $535
Commercial Cleaner $231 $325 $442 $626
Source: Canstar 2018 Direct Income Protection Star Ratings. Based on policies rated by Canstar in 2018.

Compare Direct Income Protection with Canstar

Compare the rest of your options when it comes to term life insurance using our website:

Compare Term Life Insurance

You can see that different careers come with different premiums for income protection. If you’re changing careers, have a look at our free careers guide below. 

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.

Compare Direct Income Protection with Canstar

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.

Compare Direct Income Protection with Canstar

Find out more about direct income protection with our latest star ratings report:

Direct Income Protection Star Ratings - Canstar

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