Monthly benefit to insure, capped at your essential expenses.
Recommended monthly benefit
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Annual benefit
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Estimated annual premium
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What income protection is meant to do
Income protection pays you a monthly benefit if illness or injury stops you earning. Unlike a lump-sum critical illness policy, it drips out a regular amount to keep the household running until you recover or reach the policy's end date. The number this calculator settles on is deliberately conservative, and that is by design. Insurers will not let you insure more than a slice of your income, because a benefit larger than your salary would give people a reason not to return to work. So the tool targets the lower of a replacement percentage of your income and your essential monthly expenses, then subtracts cover you already hold.
It suits salaried professionals in Hong Kong whose lifestyle depends on a paycheque, the self-employed who have no employer sick pay to fall back on, and single-income households where one illness would sink the budget. If you have substantial passive income or a partner who could carry the bills, your need is smaller, and the tool will show that once you enter existing cover.
The two-ceiling logic behind the benefit
The calculator applies two ceilings and takes whichever is lower. The first is your replacement percentage, often set around 60 to 75 percent by insurers, applied to your monthly income. The second is your essential monthly expenses, because there is little point insuring more than you actually need to spend. After taking the lower of those, it deducts any benefit you already have, for instance group cover through an employer scheme, since you should not pay twice for the same protection.
A $50,000 earner with $40,000 of essential spending
Run the defaults. Monthly income is $50,000, the replacement percentage is 70 percent, essential expenses are $40,000, and there is no existing cover. Seventy percent of income is $35,000, which is below the $40,000 expense ceiling, so the benefit lands at $35,000 a month. Over a year that is $420,000 of cover, and at the illustrative premium rate of 3 percent of the annual benefit the indicative cost is $12,600 a year.
| Step | Amount |
|---|---|
| 70% of $50,000 income | $35,000 |
| Essential expenses ceiling | $40,000 |
| Target (lower of the two) | $35,000 |
| Less existing cover | $0 |
| Monthly benefit to insure | $35,000 |
| Annual benefit (x12) | $420,000 |
| Indicative premium (3%) | $12,600 |
Change one input and the binding ceiling can flip. Drop expenses to $30,000 and the benefit falls to $30,000, because now your spending, not your income percentage, is the limit. That is the tool teaching you something real: insure what you need to spend, not a round number.
Reading the premium figure with care
The premium here is a rough indicator, not a quote. Real income protection pricing turns on your age, occupation class, smoking status, the deferred period before payments start, and how long the benefit lasts. A desk-based professional pays far less than someone in a manual trade for the same benefit. Treat the 3 percent default as a placeholder and replace it with figures from actual insurer illustrations once you have them. Note too that a benefit paid out under a personal income protection policy is generally not employment income in the way a salary is, and Hong Kong has no capital gains tax on any investment growth inside an insurance plan, but you should confirm the tax treatment of any specific policy with the Inland Revenue Department.
How long should the deferred period and benefit term be?
The deferred period is how long you wait after stopping work before the benefit starts. A longer wait, say 90 days instead of 30, cuts the premium sharply, so match it to how many months of savings you could live on. The benefit term is how long payments continue, and a policy that pays to retirement age costs more than one that stops after two years but protects you against a long-term disability that ends your career.
Does cover through my employer make a personal policy pointless?
Not necessarily. Group cover often replaces a smaller share of pay, ends the moment you leave the job, and may exclude conditions a personal policy would cover. Enter the group benefit in the existing cover field here to see the gap. Many people keep a personal top-up precisely because employer cover vanishes when they change roles.