5 practical ways to protect your loved ones, and how they compare between the UK and Australia

Category: News & United Kingdom

Protecting your family and assets is the first financial planning step taken by many people.

Ensuring there is a lump sum payable on your death, means that your loved ones will receive financial support in the event of your death, enabling them to maintain their lifestyle when you’re no longer around.

Beyond that simple transaction, there are many other different types of protection, all of which can give you the peace of mind that you and your family are protected in the event of an unexpected or cataclysmic event.

Variations of all the different types of protection are available in both the UK and Australia. However, there are some key differences that you should be aware of. This is especially the case if you’re planning to move from one country to another and are looking to replicate the cover you currently have.

Read about the types of cover that are available and how they compare between the UK and Australia.

Keeping it simple – basic life insurance

As you’ve already read, life insurance is the most basic form of personal protection. Even the Romans had a version of it for their centurions!

It’s used to protect the value of an asset, as well as other financial planning issues such as ensuring your family has enough to be able to live comfortably in the event of your death.

The market for, and uses of, life insurance are similar in the UK and Australia.

One difference worth noting is that premiums for life insurance paid via your Australian super scheme are tax-deductible to the fund that owns the insurance policy (for retail cover only). This usually results in the savings being passed back to the member.

Another point to note is that life insurance is sometimes used in the UK as a tax planning measure to help protect against an Inheritance Tax liability.

Income protection – protecting your most valuable asset

Income protection is based on the premise that one of the most valuable assets we all have is the ability to work and make money.

It therefore protects against the eventuality of that asset being harmed. It gives you the reassurance that you’ll continue to receive an income if you are unable to work for an extended period, and therefore unable to protect and provide for your loved ones.

In both Australia and the UK, income protection does the same but there are some key differences.


In Australia, most employers will only pay 10 days of sick leave each year. Your savings will likely run out quickly if you’re unable to work – the same if you’re a business owner or work for yourself.

Through income protection, you’ll receive a monthly payment of up to around 70% of your salary for six months (to a maximum of $30,000 a month) and additional super contributions. That will enable you to maintain a decent standard of living and pay recurring expenses.

Some super funds offer income protection for a premium paid from your superannuation balance.  Please note that if there is income protection through superannuation and you are not working preceding the sickness or injury, a claim will not be paid.

United Kingdom

In the UK, the social security “safety net” does provide a level of coverage if you’re unable to work through ill health or injury, although this has been diminished over the years.

In 2021/22, if you’re eligible, you’ll receive Statutory Sick Pay of £96.35 per week for 28 weeks, paid by your employer. Some employers will have an occupational sick pay scheme which will mean benefits are paid out for longer than the statutory minimum.

Income protection in the UK generally provides less than in Australia – usually between 50% and 65% of your monthly income. However, protection can be written over a much longer term – usually to age 60 – and can be based on your own occupation or any occupation.

Critical illness – providing financial support if you’re seriously ill

Critical illness protection is a simple concept designed to provide financial support if you’re diagnosed with a serious medical condition such as cancer or multiple sclerosis, or if you have a serious heart attack or stroke.

Under this type of protection, you’ll receive a lump sum if you are diagnosed with an illness covered by your policy.

The respective products sold in the UK and Australia are very similar, although definitions of illnesses tend to be more standardised in Australia.

Private medical insurance – ensuring fast access to quality treatment

Private medical insurance is an insurance policy that covers the costs of private healthcare, from diagnosis to treatment.

The key driver for taking out such a policy is that it can provide you with access to certain treatment more quickly than if you depend on state health provision.

In the UK, medical insurance is often paid by your employer and treated as a taxable benefit. There have been calls for private medical insurance premiums to be made tax-deductible, but at present that isn’t the case.

The situation is far more advantageous for policyholders in Australia. By having suitable private healthcare in place, you remove the 1.5% tax medical surcharge.

You can also be eligible for a private health insurance rebate, which means either a reduction in premium costs or the cost being offset in your annual tax return.

Total and permanent disability (TPD) insurance

While total and permanent disability insurance is often covered under income protection in the UK, you can benefit from this as stand-alone cover in Australia.

A permanent injury or illness can make it difficult or impossible to return to work, and so TPD insurance can provide a financial safety net to help support you and your family, and pay for medical costs.

TPD insurance pays a lump sum if you become totally and permanently disabled because of illness or injury. It can typically cover you for either:

  • Your own occupation — you’re unable to work again in the job you were working in before your disability
  • Any occupation — you’re unable to ever work again in any job suited to your education, training, or experience
  • Activities of daily living (ADL) – you’re unable to perform some defined daily functions such as bathing, dressing, or getting in and out of bed.

The cost of cover depends on which definition you choose and factors such as your age and health.

You may you already hold TPD insurance through your super, as many super funds offer default TPD cover that’s cheaper than buying it directly. Note that “own occupation” TPD insurance is typically only available outside your super.

Get in touch

If you want the peace of mind that you and your loved ones will be financially supported if the worst happens, we can help.

Whether you’re in the UK or Australia, get in touch if you need any advice or guidance about your protection needs.