Monthly benefit and likely premium for income-protection cover.
Monthly benefit
—
Estimated monthly premium
—
Annual benefit
—
Insuring the paycheque, not the person
Life cover pays a lump sum when someone dies. Income protection does something different and, for many working people, more useful day to day: it pays a monthly benefit if illness or injury stops you earning. This calculator sizes that benefit from your income and a chosen cover percentage, then estimates what the cover is likely to cost as a monthly premium. It is built for salaried professionals and self-employed earners who would struggle to cover rent and bills if their income paused for months.
Note up front that these are not tax figures and nothing here is set by statute. Insurers in Nigeria, regulated by the National Insurance Commission, set their own cover limits and price their own premiums. The percentages this tool uses are indicative market conventions, not official rates, so treat the output as a planning estimate and get a real quote before you rely on it.
Why cover stops short of your full salary
You will notice the benefit is capped below 100 percent of income, commonly somewhere around 65 to 75 percent. That is deliberate on the insurer's part. If a policy replaced your entire salary while you were off work, there would be little financial reason to return, so cover is held below full pay to keep an incentive to recover and go back. The benefit also starts only after a deferred period, the waiting time between stopping work and the first payment, and runs for a set term or until retirement.
Those two levers, the deferred period and the term, move the price as much as the benefit size does. A longer wait before payments begin lowers the premium, because the insurer covers fewer short claims. A shorter overall term does the same. If your employer already pays sick leave for the first few months, choosing a longer deferred period can cut your premium without leaving a real gap in protection.
NGN 600,000 a month, covered at 70 percent
Work through the defaults using the rates this calculator applies. On a monthly income of NGN 600,000 with cover set at 70 percent, the monthly benefit is NGN 420,000, which is NGN 5,040,000 a year. The tool prices the premium at an indicative 5 percent of the annual benefit, so the yearly premium is NGN 252,000, or NGN 21,000 a month, for a payout that begins after a 3-month deferred period and runs up to 20 years.
| Item | Amount |
|---|
The chart shows the monthly benefit you receive against the small monthly premium you pay for it.
Reading the estimate sensibly
The premium here is a flat percentage of the benefit, which keeps the tool simple but hides the factors a real insurer weighs. Your age, your occupation, your health, whether you smoke, and how the policy defines disability all push the price up or down. A desk-based professional pays less than someone in a hazardous trade for the same benefit. So use the figure to judge whether income protection is broadly affordable for you, then expect the actual quote to vary once underwriting is done.
A practical tip: match the benefit to your essential outgoings, not your full lifestyle. If your rent, food, transport, and loan repayments come to NGN 420,000 a month, then 70 percent cover on a NGN 600,000 income lines up neatly. Buying more cover than you need to survive a period off work just raises the premium for protection you will not draw on. And check how your chosen policy defines incapacity, because the strictest definitions only pay if you cannot do any job at all, which is harder to claim against than an own-occupation definition.
Is the income-protection benefit taxed when it pays out?
That depends on how the policy is structured and who paid the premiums, and the treatment is not fixed here. Personal protection benefits are often received free of tax, but employer-arranged schemes can be treated differently. Because Nigeria's tax rules are in transition, confirm the position with your state internal revenue service and a licensed adviser before assuming the monthly payout reaches you untaxed.
How is this different from life or health cover?
They solve different problems. Life cover pays a one-off sum to your dependants if you die. Health insurance pays your medical bills. Income protection replaces a slice of your earnings while you are alive but unable to work. Many households need a mix, and you can compare the lump-sum side using the life-insurance needs calculator and the medical side using the health-insurance tool linked above.