What percentage of my income can I insure with Income Protection?

Income Protection replaces up to 70% of your gross pre-disability income. APRA's October 2021 Individual Disability Income Insurance (IDII) reforms set this cap for every new retail policy issued by panel insurers.

Why the cap exists

APRA introduced the 70% cap to keep a financial incentive to return to work. The rule prevents insurers from putting you in a better post-tax position when disabled than when working. The full framework sits in the APRA Information Paper Individual Disability Income Insurance (October 2021), published at apra.gov.au.

The 70% applies to gross income before tax. Benefits paid outside super are taxable as ordinary income, and premiums paid from personal cash are generally deductible under ITAA 1997 s8-1 (see ATO TR 95/35).

How each panel insurer applies the cap

The headline rate is 70% across all 9 panel insurers, but most apply a tiered (sliding-scale) structure to high earners. Income above a threshold is replaced at a lower rate, again to preserve the return-to-work incentive.

| Insurer | Replacement structure | PDS reference | |---------|----------------------|---------------| | AIA | 70% of first $20,000 monthly pre-disablement income, then tiered above | Income Protection CORE, Section 5.1.2 (PDS 9 Nov 2025) | | TAL | 70% of first $25,000 per month ($300,000 p.a.) | Section 2.6 (PDS 12 Dec 2024) | | Zurich | 70% of first $240,000 p.a., 50% of next $60,000 | Section: Income protection (PDS 1 Nov 2025) | | OnePath | 70% of first $300,000 of annual income at Cover start | Income Secure Cover (PDS Oct 2025) | | ClearView | 70% pre-disability earnings (Income Protection Flex IP70); IP60 variant available | Income Protection, Section (PDS 13 May 2024, Update 5 Jun 2025) | | NEOS | 70% of first $25,000 per month of regular income | Income Support Cover (PDS 6 Dec 2024) | | Encompass | 70% of first $240,000 p.a. pre-disability earnings, divided by 12 | Income Protection cover (PDS 26 Sep 2025) | | Acenda | 70% of first $240,000 Earnings Before Disability; 20% next band for 6 months only | Income Replacement Ratio Amount (PDS 27 Sep 2025) | | Futura | 70% of first $25,000 per month of regular income | Income Protection Cover (PDS 1 Oct 2025) |

What counts as insurable income

For PAYG employees, base salary plus regular bonuses, commissions and overtime averaged over 12 months is the usual basis. Investment income, rental income, and one-off windfalls are generally excluded.

For self-employed earners, insurable income is net business income after deductible business expenses but before personal income tax. The exact definition varies by insurer, so check the PDS for the version that applies to your income mix.

What this means in practice

If you earn $120,000 gross, the maximum monthly benefit is $7,000 (70% of $10,000). Super-fund IP (salary continuance) sits inside the same APRA framework and is also capped at 70%.

Pre-October 2021 policies sometimes carried higher replacement ratios (up to 75% or more) under the old framework. Those legacy contracts may continue under their original terms, but new policies cannot match them. This is general information, not personal advice.