When deciding between an Income Protection policy and a cancellable Sick & Accident policy, it helps to understand how the two products differ.

At a glance

	Income Protection	Sick & Accident
Cover length	Long-term, typically to age 65	Short-term, usually 1–2 years, renewable annually
Cancellability	Guaranteed renewable — insurer can’t cancel your policy while premiums are paid	Cancellable — insurer can change terms or cancel at renewal
Typical benefit	A percentage of your income (commonly up to 70%) after a waiting period	A weekly benefit, with an optional lump sum for specific events
Premiums	Higher	Generally more affordable
Underwriting	Full health and medical assessment at application	Lighter underwriting, but cover may be narrower
Best fit	Stable, long-term income earners with significant financial commitments	Short-term needs, seasonal or less stable work, or those who don’t qualify for Income Protection

Income Protection Policy

• Comprehensive Coverage: Provides long-term cover, typically until retirement age (e.g. 65), for income loss due to illness or injury.
• Guaranteed Renewable: The insurer cannot cancel your individual policy or change your personal terms while premiums are paid. Note that premium rates can change for the broader policy class, and policies issued from October 2021 onwards are subject to APRA’s sustainability reforms.
• Benefit Structure: Typically pays a percentage of your pre-disability income (commonly up to 70%) after a chosen waiting period, which can range from 14 days to two years.
• Customisation: Can include additional benefits such as partial disability, rehabilitation, and indexation for inflation.
• Long-Term Financial Stability: Ideal for individuals seeking long-term cover, especially those with substantial financial commitments.
• Often recommended for: individuals in stable, high-income professions who depend on their income to sustain their lifestyle, and for clients in physically demanding or higher-risk jobs where the potential for long-term disability is greater.
• Requirements: You will need to provide health and medical information at the time of application.
• Tax: Premiums are generally tax-deductible, and benefits are typically assessable income. Please seek tax advice for your situation.

Sick & Accident Policy

• Short-Term Coverage: Provides cover for a limited period (usually one or two years), renewable annually.
• Cancellable: The insurer can change terms or cancel the policy at renewal, depending on the insured’s health status or claims history.
• Lower Premiums: Typically more affordable than Income Protection due to the shorter coverage period and cancellable terms.
• Basic Coverage: Provides a weekly benefit, with an optional lump sum for specific events. May not cover all conditions or long-term disabilities.
• Often recommended for: clients who need short-term cover, or those who don’t wish to pay for a comprehensive Income Protection policy but still want a level of protection.
• Suitable for: clients with unstable or seasonal employment where long-term income is less predictable; those in lower-risk jobs where the likelihood of long-term disability is lower; and those who don’t qualify for an Income Protection policy under standard underwriting.

In summary

Income Protection suits clients wanting comprehensive, long-term cover — particularly those with significant financial responsibilities or higher-risk occupations. A cancellable Sick & Accident policy can suit those seeking shorter-term, more affordable cover, or who don’t qualify for Income Protection.

What now

If you’re interested in Sick & Accident and/or Income Protection, please complete our online fact finder and we’ll be in touch.

This information is general in nature and does not take into account your personal objectives, financial situation or needs. Before acting on this information, consider whether it is appropriate for you and seek personal advice. Product features and terms vary between insurers and policies — please refer to the relevant Product Disclosure Statement before making a decision.