How much does income protection insurance cost?

How much 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 insurance is influenced by a number of factors, including the policyholder’s age, gender, smoking status and occupation. Older Australians, smokers and people in more physically demanding occupations are generally seen to be at greater risk of illness or injury, which can mean higher premiums. Women also tend to be charged higher income protection premiums than men in Australia, as we’ll explore in more detail below.

The insurance provider you choose can also affect the premiums you pay, with potential savings if you choose an Award-winning direct income protection insurance provider or 5-Star Rated policy. Moneysmart notes that certain policy features, such as the length of your benefit period, can also affect the cost of your premiums.

Another factor that can impact the overall cost of income protection is how premiums are treated for tax purposes. Consider seeking professional taxation advice if you’re in doubt about your situation, and visit the Australian Taxation Office’s (ATO’s) website for more information.

Why do women pay more for income protection?

Insurance premiums are generally calculated based on the risk the insurance provider associates with a policyholder, and gender is one of the factors taken into account. If a provider charges women more on average for income protection insurance than men, this may be due to differences in perceived risk and an assumed likelihood of women being more likely to make a claim on a typical income protection policy in future, based on historical trends.

How much does income protection cost?

Canstar has researched average monthly direct income protection premiums on our database at the time of writing for a person in their 30s (smokers and non-smokers, and males and females) across occupations. Professional and white-collar workers, such as accountants and receptionists, generally pay the lowest premiums. The highest average premiums are generally paid by heavy blue-collar workers, such as truck drivers, car mechanics and commercial cleaners.

Average monthly direct income protection premiums

Person in their thirties*, monthly benefit of $3,125
Occupation	Female		Male
Occupation	Non-smoker	Smoker	Non-smoker	Smoker
Accountant	$65	$82	$49	$62
Car mechanic	$123	$156	$88	$112
Checkout operator	$109	$137	$82	$102
Chef	$109	$138	$77	$97
Clerk	$70	$88	$52	$66
Commercial cleaner	$120	$150	$89	$111
Electrician	$123	$156	$88	$112
Receptionist	$70	$88	$52	$66
Registered nurse	$112	$142	$79	$100
Retail manager	$72	$91	$54	$67
Sales assistant	$78	$98	$58	$73
Sales representative	$73	$92	$55	$69
Secondary school teacher	$88	$111	$61	$77
Store person	$82	$104	$62	$78
Truck driver	$128	$161	$94	$118
Waiter	$109	$137	$82	$102

Source: www.canstar.com.au. Based on quotes obtained for Canstar’s 2021 Direct Income Protection Insurance Star Ratings (March 2021). *Premiums based on quotes for a sample of ages within the thirties age group: 32 and 37.

As the data above suggests, if you’re a smoker and you are able to quit, this could reduce your income protection and life insurance premiums considerably, in addition to potentially lowering your health care costs.

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Compare Income Protection Insurance with Canstar

If you’re currently comparing income protection insurance policies, the comparison table below displays some of the policies currently available on Canstar’s database with links to the providers’ websites for a 30-39 year old non-smoking male working in a professional, white-collar occupation. Please note the table is sorted by Star Rating (highest to lowest) followed by provider name (alphabetical). Use Canstar’s Income Protection Insurance comparison selector to view a wider range of policies on Canstar’s database. Canstar may earn a fee for referrals.

Why income protection can be worth considering

If you’re off work, you’ve used up all of your sick leave or other available leave and you aren’t eligible for workers’ compensation, you could find yourself under financial strain. You are likely to have a range of expenses that keep coming regardless of whether you’re earning money or not, such as utility bills and rent or home loan repayments. Income protection insurance is designed to replace some of your income for a set period of time, so you can continue to cover as much of your usual expenses as possible while you recover. It is different to total and permanent disability (TPD) insurance, which is designed for people who become permanently unable to work due to an accident or illness.

How to pick the right income protection policy

How do you choose the right policy for your needs? If you are researching income protection policies and comparing your options, you may find Canstar’s Direct Income Protection Star Ratings and Award helpful. Canstar assesses providers on their policies, with NobleOak announced as the Direct Income Protection Award winner for the sixth year in a row in 2021. You may also like to compare direct income protection policies with Canstar. Keep in mind it’s a good idea to read any relevant policy documentation before you make a decision about which policy may be right for you.

Finally, bear in mind that many Australians hold life and income protection insurance through their super fund, so before purchasing a policy it could be worth checking whether you already have this type of cover in place and whether it is sufficient for your needs.

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Additional reporting by James Hurwood and Tamika Seeto.

Main image source: Andrii Yalanskyi/Shutterstock.com

Thanks for visiting Canstar, Australia’s biggest financial comparison site*

This article was reviewed by our Sub Editor Tom Letts before it was updated, as part of our fact-checking process.

Jacqueline Belesky

Sub Editor

Jacqui Belesky is a senior marketing communications professional with over 15 years experience in journalism, marketing, editing, digital content, content marketing, content management & PR. She holds a Bachelor of Journalism (Distinction), QUT, and postgraduate qualifications in publishing from UQ.

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