# How to Choose the Best Income Protection Insurance Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-01-24 Category: INSURANCE Category URL: https://financedigest.com/category/insurance Meta Title: How to Choose the Best Income Protection Insurance in Australia Meta Description: Discover how to select the right income protection insurance plan for sickness or injury, including factors to consider and coverage options. Learn more at URL: https://financedigest.com/how-to-choose-the-best-income-protection-insurancehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1030077518-1736816288884-compressed.jpg) The world of insurance isn’t necessarily fun for us consumers. Effectively, we’re insuring against our own bad luck. Your car might get stolen. Your house might burn down. You could lose your job. You might get sick. While the younger amongst us may feel like these things simply won’t happen to them, the thing that catches us out is that there is rarely a moment when we realise just how fallible we are, and by the time those unfortunate things happen, we kick ourselves that we only _thought_ about insuring against that bad luck, but didn’t actually go through with it. With all the choices of insurance, the monthly premiums can add up and up, meaning it can become difficult to decide what insurance is worthwhile and what can be [scaled back](https://www.financedigest.com/russia-promises-to-scale-back-ukraine-war-but-west-sceptical.html "Russia promises to scale back Ukraine war but West sceptical"). However, without secure income, it doesn’t matter which [insurance policies you have – you can’t pay for them, which is why income protection insurance is one of the smartest insurance investments](https://www.financedigest.com/classic-car-insurance-broker-launches-future-classic-investment-guide.html "Classic car insurance broker launches Future Classic investment guide") you can make. Just like all other [insurance products](https://www.financedigest.com/two-thirds-of-consumers-would-prefer-to-deal-with-a-single-provider-for-insurance-products.html "Two-thirds of consumers would prefer to deal with a single provider for insurance products"), Income protection is an ongoing expense, and it is difficult to decide what policy is right for you, and what is a reasonable policy for your circumstances. In this article, we will discuss some things you should look at in order to choose the best income protection insurance among those offered by various reputable life insurance companies in Australia, such as [nobeloak.com.au](https://www.nobleoak.com.au/income-protection-insurance/). First, let’s define what income protection insurance is. It might sound simple, but not all income protection [insurance does the same thing](https://www.financedigest.com/ten-things-youre-doing-that-are-invalidating-your-car-insurance.html "TEN THINGS YOU’RE DOING THAT ARE INVALIDATING YOUR CAR INSURANCE"). For the most part, income protection insurance will [provide you with a certain percentage of your regular income if you were unable to work due to injury or sickness for long periods of time](https://www.financedigest.com/finger-pointing-helps-no-one-it-is-time-for-retailers-energy-providers-and-government-to-band-together.html "Finger-pointing helps no one: it is time for retailers, energy providers and government to band together"). That percentage payout is dependent on how much you are willing to [pay to the insurance](https://www.financedigest.com/are-you-getting-what-you-are-paying-for-when-it-comes-to-cyber-liability-insurance.html "ARE YOU GETTING WHAT YOU ARE PAYING FOR WHEN IT COMES TO CYBER LIABILITY INSURANCE?") company each month. Some policies go one step further and will also cover involuntary redundancy, but for the purposes of this article, we’ll be focusing on how to choose an [income](https://www.financedigest.com/swiss-chocolate-makers-focus-on-incomes-to-end-child-labour.html "Swiss chocolate makers focus on incomes to end child labour") protection plan for sickness or injury. **What do you want to be covered for?** It’s worth noting that injury & sickness are different things. An injury is considered to be an accident that impairs your ability to do your job by affecting your physical movement. A sickness can be a disease or illness that may not necessarily stop you from being able to move, but may still inhibit your ability to function, such as cancer. [Deciding which of these you want to include in your policy will impact the monthly payments required to keep](https://www.financedigest.com/belgian-court-decides-to-keep-eu-corruption-case-suspect-in-detention.html "Belgian court decides to keep EU corruption case suspect in detention") your policy active, but it’s quite normal for policies to cover both injury & illness. **What do you do for a living?** This sounds obvious, but your career choice can have a [profound impact](https://www.financedigest.com/stanchart-ceo-says-at1-bond-wipeout-has-profound-impact.html "StanChart CEO says AT1 bond wipeout has profound impact") on the likelihood of injury or illness. For example, blue-collar work such as construction, logistics, and [trades come with a significantly increased risk of physical injury due to proximity to power](https://www.financedigest.com/belgium-supports-energy-price-caps-suspending-trading-in-eu-power-crunch.html "Belgium supports energy price caps, suspending trading in EU power crunch") tools, heavy equipment, and working in unusual, hard-to-access spaces. As such, someone working in those professions may [value income protection from injury more important](https://www.financedigest.com/the-importance-and-growth-of-banking-ecosystems-to-create-superior-customer-experiences-and-value.html "The importance and growth of banking ecosystems to create superior customer experiences and value") than illness. On the other hand, white-collared office [workers are unlikely to meet with freak power-tool related accidents](https://www.financedigest.com/industries-with-the-most-workplace-accidents-and-workers-comp-benefits.html "Industries with the Most Workplace Accidents and Workers Comp Benefits"), but their proximity to other people for long periods of the day make them much more susceptible to illness. As such, they may value income protection from illness over injury. However, always consider that [sustaining an injury or developing](https://www.financedigest.com/nano-one-awarded-10-million-from-sustainable-development-technology-canada.html "Nano One Awarded million from Sustainable Development Technology Canada") an illness is not something that is restricted to the workplace. [Office workers](https://www.financedigest.com/google-mandates-workers-back-to-silicon-valley-other-offices-from-april-4.html "Google mandates workers back to Silicon Valley, other offices from April 4") can still be in accidents that cause physical disability, although they are less likely to be prevented from doing an administrative job. Blue-collar workers, alternatively, can still pick up illnesses, [something COVID-19 forcefully demonstrated in recent times](https://www.financedigest.com/the-spritz-gets-a-shake-up-something-nothing-launches-new-ready-to-drink-spritz-in-time-for-summer.html "The Spritz gets a shake up! Something & Nothing launches new ready-to-drink Spritz in time for summer"). For this reason, you really should consider insurance against both [illness and injury when looking for income protection insurance in Australia](https://www.financedigest.com/virgin-australia-says-high-staff-illness-rates-hampering-capacity-lifting-fares.html "Virgin Australia says high staff illness rates hampering capacity, lifting fares"). **What is Your Benefit Ratio?** The benefit ratio is much of your regular income an income protection plan will cover. It is often presented as a percentage. For example, a benefit ratio of 70%, or 70/30, means an [insurance provider will cover](https://www.financedigest.com/japan-insurers-to-maintain-cover-for-lng-vessels-in-russian-waters.html "Japan insurers to maintain cover for LNG vessels in Russian waters") $70 for every $100 you lose through not being able to work. A 50/50 or [50% benefit ratio means that the company](https://www.financedigest.com/impact-com-appoints-a-raft-of-new-business-development-representatives-as-the-technology-companys-client-roster-grows-by-more-than-50.html "impact.com appoints a raft of new Business Development Representatives as the technology company’s client roster grows by more than 50%") will cover $50 for every $100 you lose. The higher the benefit ratio, the more expensive premiums become, while the lower the ratio, the more affordable premiums are but the less you get. If you’re the sole breadwinner or you have a bounty of expenses, a [higher benefit ratio will cost](https://www.financedigest.com/uk-pub-operator-wetherspoons-loss-narrows-despite-higher-costs.html "UK pub operator Wetherspoon’s loss narrows despite higher costs") more, but you’ll need the support if the time comes. **How Much Are You Willing to Pay?** As with any major or ongoing expense, before committing to anything you need to work out your budgets. This will determine not only what you can afford to pay, but also what premium/ benefit ratio you need. The best way to determine what you need, and following on from that, what you can afford, is to differentiate your expenses into _needs_ and _wants._ Needs are your necessities such as rent/mortgage payments, utilities, [food & supplies, whereas your _wants_ are more your luxuries such as streaming services, food delivery](https://www.financedigest.com/european-food-delivery-shapes-up-with-getirs-gorillas-buy.html "European food delivery shapes up with Getir’s Gorillas buy"), dining out and purchasing items such as clothing. It’s also worth considering what you _won’t need_ if you are off work. For example, if you are off work, your travel and commuting expenses will drop right down, so you may wish to discount expenses such as train fares or [car insurance](https://www.financedigest.com/5-tips-for-selecting-the-best-car-insurance-coverage.html "5 Tips for Selecting the Best Car Insurance Coverage") in order to keep premiums at a minimum. **What is Your Waiting Period?** A waiting period is the amount of [time that passes from you first being unable to work until your premium](https://www.financedigest.com/us-homeowners-premium-set-to-surpass-90bn-for-the-first-time-according-to-annual-aon-study.html "US homeowners premium set to surpass bn for the first time, according to annual Aon study") kicks in to support you. When making a decision on what waiting period you want, you should also consider how much sick leave, annual leave & long service leave you may have.  Choosing a longer waiting period can bring cheaper premiums, but if you [don’t have savings or any leave](https://www.financedigest.com/finding-it-hard-to-recruit-good-it-security-managers-dont-leave-yourself-vulnerable-to-attack.html "Finding it hard to recruit good IT security managers? Don’t leave yourself vulnerable to attack") built up, a long waiting period won’t work for you. Normally, benefits aren’t paid during the waiting period, either, so make sure you choose wisely. **Benefit Period** This one is tricky to evaluate, because you’ll be trying to predict the future, but you can make some assumptions based on the [type of cover you need](https://www.financedigest.com/breaking-down-the-types-of-insurance-you-need.html "Breaking Down the Types of Insurance You Need"). Returning to your career type, physical injuries can take a lot longer to recover from than an illness, so you may wish to [choose a benefit](https://www.financedigest.com/how-choosing-a-compliant-broker-benefits-traders.html "How Choosing a Compliant Broker Benefits Traders") period of between 1-2 years. Longer benefit periods increase your premium, but cover you for longer. A good practice is to consider what you would do if you were permanently unable to [return to work](https://www.financedigest.com/beijing-nervously-returns-to-work-as-china-doubles-down-on-zero-covid-policy.html "Beijing nervously returns to work as China doubles down on ‘zero-COVID’ policy"), for example, you were in an accident and permanently lost the ability to work. If your job required you to have full physical movement, you would likely have to re-train to [continue working](https://www.financedigest.com/hybrid-working-and-the-continued-security-challenges-for-financial-organisations.html "Hybrid working and the continued security challenges for financial organisations") in a different profession, so you may want a policy that not only covers your salary, but also education costs. **Be Honest** Being honest with your [insurance company](https://www.financedigest.com/incentive-fm-wins-contract-with-global-insurance-services-company.html "Incentive FM wins contract with global insurance services company") is important, but you also need to be honest with yourself. Don’t pretend that you can get by on a shoe-string budget just to keep premiums down. Mental health is important to physical healing, and if you’ve gone so low with your premiums that you [can’t afford](https://www.financedigest.com/accountants-cant-afford-to-ignore-making-tax-digital.html "Accountants can’t afford to ignore Making Tax Digital") any enjoyment during your recovery, your recovery period may become longer than your benefit period allows. You’ll [need to consider all of the above before you invest in income protection insurance](https://www.financedigest.com/insurance-that-every-individual-needs.html "Insurance that every individual needs…") to make sure you’re paying for something that is right for you. The best outcome is that you’ll never need it, and you’ll forever question if it was a worthwhile investment, but on the chance that you do need it, you’ll find it was one of the best decisions you ever made. **This is a Sponsored Feature** --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---