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Income and life

How cover works

How income protection, life, TPD and trauma cover work.

Personal cover comes in four kinds. Income protection pays a monthly amount while you cannot work; life, TPD and trauma pay a lump sum.

Income protection

Part of your income while you cannot work

  • The waiting period, from 14 days to 2 years, is how long you are off work before it pays. The benefit period, commonly 2 or 5 years or to age 65, is how long it keeps paying.
  • Policies issued since 1 October 2021 are based on what you earned in the year before you claim, and pay at most 90% of it for six months and 70% after. Insurers stopped selling new agreed-value policies from 31 March 2020.
  • Whether penalty rates, overtime and allowances count as income depends on the policy’s wording. So does whether normal pregnancy and childbirth are excluded. The read-back shows both.
  • Premiums you pay yourself for cover of your salary are tax deductible, and the benefits are taxable. Cover inside super is not deductible, and cannot pay more than the income you had.

Source: APRA, September 2020; Moneysmart, June 2026; ATO, June 2026; insurers’ product disclosure statements.

Life, TPD and trauma

Lump sums

  • Life cover pays a lump sum on death, and often on a terminal illness.
  • TPD pays if you cannot work again. Own-occupation cover means you cannot work in your own job; any-occupation cover means you cannot work in any job suited to your education, training or experience. Own-occupation cover costs more and is usually only available outside super.
  • Trauma pays a lump sum on a listed illness or injury, whether or not you can work. Super funds have not offered new trauma cover since July 2014.
  • A TPD payout from super can be taxed at up to 22% if you are under 60.

Source: Moneysmart, July 2026; ATO; APRA.

Cover through your superDefault cover from age 25 with $6,000 in the account. It stops after 16 months without a contribution unless you ask to keep it.

What to know

Good to knowTwo policies rarely both payIncome protection in super and a policy outside it do not usually add up: policies generally reduce what they pay by other disability income you receive. The read-back shows each one’s terms.Source: Your super fund or insurer

High income

Income protection for a senior income.

Income protection replaces part of your pay if illness or injury stops you working. At a senior income, the default cover inside super is often small against what you earn.

Income protection at your income

Consultants, GPs and anyone on a high salary

Policies issued since 1 October 2021 pay at most 90% of your income for the first six months of a claim and 70% after that. Default cover inside super is often a small, fixed amount.

Fill in your details above to see your result.

Older policies kept their original terms; the read-back shows which kind you hold. Source: APRA.

Your cover, in one place

Read from your policies and your super

Examplea consultant on $400,000As at 11 Sep 2026
Income protection
$3,000 a month, inside super
Death cover
$185,600 in super, falling from age 41
TPD
$185,600 in super
Trauma
None held
Practice cover
See Private Practice

Your income protection is a small fixed amount against a $400,000 income. What you do about it is up to you.

Example figures. We read your cover; we do not recommend it.