Income Protection Gap Calculator
Find out how much of your income is unprotected — and what it would cost to close the gap.
Maximum IP cover is 70% of gross monthly income. Premium estimates are indicative only — actual premiums depend on occupation, health, insurer, and policy features.
Understanding Income Protection Insurance
Income protection insurance is designed to replace your income when illness or injury stops you from working. It is often called the most important type of personal insurance because your ability to earn an income underpins every other financial goal — paying your mortgage, funding retirement contributions, and meeting day-to-day expenses. Yet research consistently shows that most Australians are significantly under-insured in this area.
What Income Protection Covers
A standard income protection policy pays a monthly benefit — typically up to 70% of your gross pre-disability income — if you are unable to work due to sickness or injury. The benefit continues until you recover, your chosen benefit period ends, or you reach age 65, whichever comes first. Cover applies to a broad range of conditions: musculoskeletal injuries, mental health conditions (which are now one of the leading causes of claims), cancer, cardiovascular disease, and neurological conditions.
Waiting Periods Explained
The waiting period is the number of days you must be continuously off work before your benefit payments begin. The most common options are 30, 60, and 90 days. A shorter waiting period provides faster access to your benefit but comes with a higher premium. A longer waiting period lowers your premium significantly — in many cases by 20% to 40% — but requires you to self-fund your living expenses during the waiting period. The 90-day waiting period is well-suited to people who maintain three to six months of living expenses as an emergency fund.
Benefit Period Tradeoffs
The benefit period determines how long your insurer will pay your monthly benefit if you remain unable to work. Options typically range from two years and five years through to age 65. A two-year benefit period carries the lowest premium but leaves you exposed to longer disabilities. A to-age-65 benefit period provides the most comprehensive protection and is strongly recommended for people with mortgages and young families, as a serious illness or injury could prevent you from working for decades.
Why 70% Is the Standard Maximum
Insurers cap income protection benefits at 70% of your pre-disability income — not 100% — to maintain a financial incentive for you to return to work when you are able to. Most policies also coordinate with other income sources: if you are receiving workers' compensation, sick leave, or other disability benefits, your IP benefit may be offset to ensure your total income does not exceed 70%. When calculating your gap, this calculator targets the full 70% maximum as the recommended protection level.
Who Should Consider Income Protection?
Income protection is most valuable for people who are the primary or sole income earner in their household, people with significant debt obligations (especially a mortgage), self-employed individuals who have no access to employer sick leave, and anyone whose lifestyle would be seriously disrupted if their income stopped. Even employees with employer sick leave entitlements typically have only two to four weeks of paid leave — far less than the months or years that a serious illness can last.
Super vs Standalone IP
Income protection inside superannuation is funded from your pre-tax contributions and the premiums do not reduce your take-home pay. However, benefit periods inside super are typically capped at two years, and accessing payments requires meeting superannuation release conditions. A standalone policy outside super offers longer benefit periods (to age 65), and the premiums are personally tax deductible. For comprehensive protection, most people are better served by a standalone policy.