Your income pays for everything — the mortgage, super, school fees, the weekly shop. Income protection insurance steps in when illness or injury stops you earning. The Income Protection Gap Calculator shows you in seconds how much of your income is unprotected, and what closing that gap would cost.
What the calculator does
Enter three numbers: your monthly gross income, any existing IP cover you hold (or zero if you have none), and your age. Pick your waiting period and benefit period, then calculate.
You get back:
- Your maximum insurable amount — 70% of your gross monthly income, the ceiling any insurer will pay
- Your monthly cover gap — what you could insure minus what you currently hold
- Your indicative annual premium range — a rough estimate based on age and the gap
These are planning figures, not quotes. Real premiums swing on occupation, health, smoking, waiting and benefit periods, and the insurer itself.
A worked example
Someone earning $8,000 a month at 40, no cover, 30-day wait, benefits to 65. The insurer ceiling is 70%, so the maximum insurable is $5,600 per month. With no existing cover, the entire $5,600 is the gap. At 40, closing that gap costs roughly $314 to $510 per year — about $6 to $10 a week to protect $96,000 of annual income.
Run your own numbers in the Income Protection Gap Calculator.
Why 70% and not 100%
Insurers cap income protection at 70% of your pre-disability income. They need you financially motivated to go back to work when you're able. Pay 100% replacement and that incentive evaporates.
If you're also collecting workers' comp, employer sick leave, or Centrelink during a claim, most insurers offset those against your benefit. Your total from all sources doesn't exceed 70%.
Waiting periods
The waiting period is how long you must be off work before your first payment arrives. Most common: 30, 60, or 90 days.
Shorter waiting period means faster cash but higher premium. A 90-day wait can cut your premium by 20–40%, but you're funding yourself until the payments start. If you've got three to six months of living expenses set aside, the longer wait usually makes financial sense.
Benefit period
A two-year benefit period costs less. It covers most short-to-medium illnesses and injuries, but leaves you exposed to long-term stuff — spinal injuries, cancer, severe mental health issues that stretch years.
A to-age-65 benefit costs more but covers the scenarios that actually wreck finances: being unable to work for a decade. Anyone with a mortgage and dependants usually wants the longer benefit.
Is income protection tax deductible?
Yes. Premiums on a standalone policy (outside super) are tax deductible in your personal return. At a marginal rate of 37%, a $3,000 annual premium costs you roughly $1,890 after tax.
The catch: any benefit payments count as income and go in your tax return. Your Income Tax Calculator shows how a benefit payment shifts your tax position for the year.
Inside super or outside super?
Cover inside super comes from pre-tax contributions — doesn't dent your take-home. But benefit periods inside super max at two years, and you need to meet super release rules before you can touch the money.
A standalone policy outside super offers benefits to 65, is personally tax deductible, and you access payments directly without navigating super rules. Most people wanting comprehensive long-term cover go with standalone.
Who needs income protection most
Income protection matters most for:
- Sole and primary income earners — if you stop earning, the household stops
- People with mortgage debt — the bank doesn't pause repayments because you're sick
- Self-employed — no employer sick leave, no redundancy, no safety net beyond what you've built
- Anyone without three months of expenses in reserve — even a 30-day wait becomes an emergency
Employees with good sick leave still get two to four weeks paid. A serious illness or injury lasts months or years — way past what your employer gives you.
How this calculator sits with the others
Income protection doesn't live alone. If you're reviewing your insurance setup, run a few related tools at once:
The Life Insurance Needs Calculator estimates the lump-sum your family would need if you died — different question entirely from what happens if you're alive but can't work.
The Financial Health Check gives you a full view across debt, savings, super, and insurance — useful context before deciding what to prioritise.
The Super Balance Projector shows how gaps in contributions — from years off work, for example — hit your retirement balance.
All three take less than ten minutes and show you where the real gaps are before you speak to an adviser.
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This calculator provides general information only and does not constitute financial advice. Premium estimates are indicative and based on broad industry age bands. Speak to a licensed financial adviser or insurance specialist before making decisions about your cover. AusCalcs operates in accordance with ASIC Corporations (Generic Calculators) Instrument 2026/41.