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Do I need income protection insurance?

Protect your income and your family if the unexpected should occur

Have you ever thought to yourself how expensive living is? 

It’s a lot, right? But at the same time, it’s somewhat non-negotiable. Even just the everyday costs like food, housing and bills tend to chew up a fair chunk of your income. 

Now imagine if you didn’t have an income to rely on. How would you pay for everyday essentials and provide for your family? 

It can be scary to think about but what’s even scarier is that most Australians don’t have a back-up plan or any real protection over their salary.  The truth is that 60% of Australians, regardless of age, will need to take a prolonged break from work at some point in their lives due to illness or injury1.   

So how can you ensure your financial security and peace of mind if the time comes when you are too unwell to work for a prolonged period of time?  If you’re left feeling a little anxious about your income and whether you will be able to live comfortably without the assurance of a regular wage, it may be time to explore income protection insurance.

What is income protection insurance and what does it cover?

According to MoneySmart, income protection insurance pays part of your income if you’re unable to work due to sickness or injury.  

It can cover up to 85% of your pre-tax income and can be claimed if you have a condition that directly prevents you from working.  

The aim of income protection is to partially replace your normal wage so that you can afford to keep up with your normal financial commitments and pay for living expenses. You usually receive a monthly benefit that is paid until you can return to work. 

There are many different policies and insurance products that will provide different levels of cover. In some circumstances, your income protection premium is tax-deductible. Ensure you read the relevant product disclosure statement before committing to any insurance.  

If you are comparing different insurance covers, you should select a policy that will provide enough to cover your financial commitments and basic needs, so you don’t have to stress about your finances.  

Now, onto a question we hear far too often… 

“I’m covered by Workers Compensation so why do I need Income Protection?”

Many people think that Workers Compensation and Income Protection are one and the same, but this is not the case.  

The key difference is that income protection covers you for injuries and illnesses both inside and outside of work while the former only covers you for direct work-related conditions.  

Accidents happen every day and when you consider that 75% of accidents occur outside of work, income protection seems like the safer and more beneficial option.  

When you should consider income protection insurance.

Income protection can be important to consider if your goal is to be financially independent and secure for your future.  

Further, many individuals could be severely affected by the loss of a regular wage.  

You may like to consider income protection if you: 

  • have family members or dependents that rely on the income you earn, especially if you are the primary income earner in your family;
  • are self-employed or a small business owner, as you may not have sick or annual leave;
  • have debt, such as a mortgage, you’ll need to make payments on even if you’re unable to work.

Income protection insurance – as well as other personal insurances – should make up part of your comprehensive financial plan. 


At NFPG, our independent financial advisers can help you determine the insurance solutions that will work for your lifestyle and financial situation.  When it comes to putting in place and claiming your insurance, an experienced financial adviser can help you make the best choices. 

NFPG’s professional advisers have the technical expertise to help you get the right cover and the right insurance products in the first place. According to ASIC, an insurance claim through a financial adviser is also around 50% more likely o to be successfully claimed2.   

If you want to secure your future with income protection insurance, talk to our financial advice team in Newcastle today. 

Your first appointment is complimentary. Our offices are located in Newcastle – The Junction (NFPG), Central Coast – Erina (CCFPG) and  Sydney CBD (SWA). 


1 RI Advice Group Pty Ltd “Life protection solutions: How they fit together – to cover you and those who depend on you” 
2 https://asic.gov.au/regulatory-resources/find-a-document/reports/rep-498-life-insurance-claims-an-industry-review/ 

DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group and Sydney Wealth Advisers are subsidiaries of Coastal Advice Group which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.  
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