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If you live and work in Australia, protecting your income is just as important as growing it. Whether you're a salaried employee, self-employed, or a small business owner, your income is what keeps your household running. But what happens if an illness or injury leaves you unable to work? That’s where payment protection insurance steps in.
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Let us understand everything you need to know about income protection insurance in Australia, including its features, tax benefits, claim process, and how term insurance plans can act as salary protection insurance.
Income protection insurance in Australia helps you manage your financial obligations if you’re unable to work due to illness or injury. It replaces a portion of your pre-tax income for a specified period, ensuring that essential expenses like rent, mortgage, and daily bills can still be covered.
Income protection insurance can cover:
Up to 90% of your pre-tax income in the first six months
Up to 70% of your pre-tax income for a longer period thereafter
Each policy has its own definition of partial or total disability, which must be met to make a claim. These definitions and any exclusions are generally detailed in the insurer’s Product Disclosure Statement (PDS).
Term Plans
You may need payment protection insurance if you:
Are self-employed or run a small business with no access to sick leave
Have dependents or family members relying on your income
Have a mortgage or other financial commitments
Preparing a personal budget based on Australian household income is a helpful first step to assess how much income protection you may require.
According to the Australian Taxation Office (ATO):
Only the portion of premiums paid to protect employment income (salary and wages) is tax-deductible.
If you receive payments under an income protection policy, whether lump sum or regular payments, they must be included in your tax return.
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Life insurance, trauma, or critical illness insurance
| Feature | Details |
| Policy Type | Indemnity Value Policy: Pays a percentage of salary at claim time (best for stable income). Agreed Value Policy: Pays a fixed agreed amount (unavailable for new customers after 31 March 2020). |
| Waiting Period | Ranges from 14 days to 2 years. Longer waiting periods generally mean lower premiums. |
| Benefit Period | Options include 2 years, 5 years, or up to age 65. Longer periods offer better coverage at a higher cost. |
| Premium Types | Variable Age-Stepped Premiums: Increase with age. Variable Premiums: Start higher but rise more slowly. |
To buy a salary protection insurance, you need to provide the following details:
Age and occupation
Income details (salary, commissions, etc.)
Medical history
Lifestyle choices (e.g., smoking status, risky hobbies)
Providing complete and honest answers is essential to avoid claim rejections or policy cancellations.
If you need to file a salary protection or income replacement insurance claim:
Notify your insurer promptly
Submit necessary medical and employment documents
Include any payment received under income protection in your tax return
While payment protection insurance helps replace your salary temporarily, term life insurance offers broader and longer-term financial security. A term insurance policy can:
Pay out a lump sum or offer a monthly income stream to your family
Replace your long-term earning capacity in case of death
Help cover outstanding debts, education, and living expenses for dependents
If you're an NRI residing in Australia, Policybazaar offers tailored term insurance plans from Indian insurers that provide:
Dedicated claim support for the family in case of your unfortunate death during the policy term
You can claim term insurance GST waiver for NRI premiums paid via NRE (Non-residential External) bank accounts
Global coverage with pre-approved cover that offers benefits no matter where you are geographically
The term life insurance quotes are much more affordable in India compared to international term plans
Tele or video medical facility in term insurance allows NRIs to clear their medicals without visiting India
You can also link your coverage with home loan obligations back in India, ensuring your family retains their home in your absence.
Here is how you can buy term life insurance for NRIs from India:
Step 1: Visit the term insurance for NRI page of Policybazaar
Step 2: Enter your basic details like name, gender, contact information, and country
Step 3: Choose the right smoking habits, occupation type, annual income, and educational qualifications
Step 4: Select the best term insurance for income protection and proceed to pay
Income protection insurance in Australia serves a critical function in safeguarding your income during periods of temporary disability. However, pairing it with a comprehensive term insurance plan, especially for NRIs, can provide comprehensive financial protection for your family, both in Australia and back in India.
˜Top 5 plans based on annualized premium for bookings made on https://www.policybazaar.com in the first 6 months of FY 24-25.
Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
+Rs. 487/month (Rs.16/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.
Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited
We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881
For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale
Policybazaar Insurance Brokers Private Limited | CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana – 122001 | Registration No. 742, Valid till 09/06/2027, License category- Composite Broker Visitors are hereby informed that their information submitted on the website may be shared with insurers. Product information is authentic and solely based on the information received from the insurers.
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+Rs. 820/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.
+Rs. 1,443/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.
˜ Policybazaar Promise reflects the guarantee offered by insurers. Price assurance is based on certifications shared by insurers with us.
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