Are Income Protection benefits indexed to inflation?

Yes, every panel insurer applies CPI indexation to the Income Protection sum insured each year, and most also offer in-claim CPI escalation as a standard or optional benefit. Indexation protects the real purchasing power of the monthly benefit over long policy terms.

The two layers of indexation work differently. Sum-insured indexation increases the cover amount each policy anniversary while you are well. In-claim escalation increases the monthly benefit paid while you are actively claiming.

How each panel insurer applies indexation

| Insurer | Annual sum-insured indexation | In-claim escalation | PDS reference | |---------|-------------------------------|---------------------|---------------| | AIA | CPI Increase, with 5% floor on some structures | Optional, opt-out documented | Priority Protection PDS v32 (9 Nov 2025), Section 7.2 | | TAL | Indexation Factor (CPI Weighted Average All Capital Cities) | Increasing Claim Option, annual increase by Indexation Factor and five per cent | Accelerated Protection PDS (12 Dec 2024), Sections 2.6.3 and 9 | | Zurich | Annual CPI increase | In-claim CPI for Total Disability monthly benefit | Zurich Wealth Protection PDS (1 Nov 2025), Income Safeguard section | | OnePath | Indexation Benefit, applies to maximum sum insured unless declined | Indexation Benefit (Non Super and Super tables) | OneCare PDS (1 Oct 2025), Indexation section | | ClearView | Indexation Benefit, CPI-linked, standard built-in | Optional in-claim escalation | ClearChoice PDS (13 May 2024, Update 5 June 2025), Section: Indexation Benefit | | NEOS | Indexation Benefit standard | Optional in-claim escalation | NEOS Protection PDS (6 Dec 2024), Income Support Cover | | Encompass | Indexation Benefit standard | Standard built-in | Encompass Protection PDS (26 Sep 2025), Income Protection tables | | Acenda | Greater of CPI or 5%, or CPI only depending on structure | Optional in-claim CPI | Acenda Insurance PDS (27 Sep 2025), Indexation section | | Futura | Indexation Benefit standard, super and non-super | Optional in-claim escalation | Futura Protection PDS (1 Oct 2025), Income Protection Cover |

Sum-insured indexation while you are well

How it works

On each policy anniversary, your sum insured (and the premium) rises by the published indexation factor. Most insurers use the Consumer Price Index Weighted Average All Capital Cities. Some apply a floor (5% on AIA structures, 3% on certain Acenda structures, 5% on TAL's Increasing Claim Option).

How to opt out

Most insurers let you decline indexation on any anniversary. Declining keeps your premium flat that year, but your real cover erodes over time. OnePath's PDS confirms indexation applies to the maximum sum insured unless declined (OneCare PDS, 1 Oct 2025).

In-claim escalation while you are claiming

In-claim escalation, often called an Increasing Claim Option, lifts your monthly benefit each year you remain on claim. TAL's Increasing Claim Option uses the Indexation Factor and a five per cent floor (Accelerated Protection PDS, 12 Dec 2024). Zurich applies in-claim CPI automatically to its Total Disability monthly benefit (Zurich Wealth Protection PDS, 1 Nov 2025).

For long benefit periods (to age 65 or 70), in-claim escalation can be the difference between a $5,500 monthly benefit at year 1 and a real-terms equivalent at year 20. Without escalation, a multi-decade CPI run can erode purchasing power by 30 to 50 per cent.

What to verify before quoting

• Whether sum-insured indexation is built-in or opt-in for your insurer.
• Whether in-claim escalation is built-in or a paid optional benefit.
• The exact floor (CPI only, CPI or 3%, CPI or 5%) used by your chosen insurer.
• Whether the indexation factor applies to the Super Contribution Option as well as the main IP benefit. Futura's PDS confirms it does.

This is general product information, not personal advice.