Centrelink rates reflect the 20 September 2026 indexation.
“I’ll just go on Centrelink.” It’s what plenty of us say when someone brings up insurance, and it’s a fair thought. We pay tax, there’s a safety net, so surely it catches us if we can’t work.
Centrelink is a real safety net, but it has holes. It can be hard to qualify for, it pays far less than most people earn, and it doesn’t stack with income protection (insurance that pays you a regular monthly benefit if illness or injury stops you working).
Can you get income protection and Centrelink at the same time?
You can hold both, but they don’t stack the way most people hope. Centrelink counts income protection payments as income. The more you receive, the less Centrelink pays, and a large enough benefit can reduce your Centrelink payment to zero. Treatment can vary by policy, so check with Services Australia or an adviser.
What that means for you: a policy paying around 70% of your pay will often leave Centrelink out of the picture altogether.
How much does Centrelink pay if you can’t work?
For a single person with no children, from 20 September 2026:
- Disability Support Pension (DSP): $1,237.70 a fortnight, about $32,180 a year
- JobSeeker Payment: $833.70 a fortnight, about $21,676 a year
It’s one or the other. You can’t be paid both.
What that means for you: say you earn $80,000 a year. An income protection policy paying 70% of that would pay about $56,000 a year before tax (benefits are generally taxed as income), compared with $32,180 on the DSP or $21,676 on JobSeeker. Your actual benefit depends on your policy’s percentage and any caps, so check the product disclosure statement (PDS), the document that sets out exactly what a policy covers.
Why is the Disability Support Pension so hard to get?
A doctor’s letter saying you can’t work isn’t enough. Services Australia, which runs Centrelink, applies two tests:
- A medical test. Your condition is scored against its impairment tables, which rate how much a condition limits your everyday function. You need at least 20 points. Not being able to do your own job isn’t the same as losing function.
- A work capacity test. You must be unable to work 15 hours or more a week, generally for at least the next two years.
Most applicants also need to have completed the Program of Support, about 18 months with an employment services provider, unless an exemption applies.
Take a carpenter with a disc injury who can’t go back to the tools. If Centrelink decides he can still drive and sit at a desk, he might score 10 points, not the 20 he needs. Genuinely unable to do your job, and still no payment.
The numbers back this up. The government’s response to a Senate inquiry, reported by ABC News in November 2024, showed about 113,000 claims and roughly 50,100 rejected, around 44%. ABC News also reported processing times hitting 107 days in 2024.
What that means for you: a person midway through treatment, or on track to recover, will generally struggle to qualify, because the rules look for conditions that are diagnosed, treated and stable.
What if you have savings or a partner who works?
Centrelink payments are means tested, meaning they depend on your income and assets.
- Savings: under the liquid assets waiting period, if you have more than about $5,500 in readily available savings (single, no dependants), you may wait up to 13 weeks before payments like JobSeeker start. The threshold is higher for couples.
- Partner income: in general, a partner’s earnings above $1,415 a fortnight start reducing your payment, and around $2,662 a fortnight (roughly $69,000 a year) can cut it out. Exact figures vary by payment, so check Services Australia.
What that means for you: a household with a modest second income can fall out of Centrelink support, and that’s when your own savings take the hit.
What about a short-term illness or injury?
With a medical certificate, JobSeeker can include an exemption from job search requirements, for a period your doctor certifies. But it’s still a low payment, and it’s still subject to the income and assets tests above.
Income protection is built for this gap. It can pay for temporary conditions as well as long-term ones, subject to your policy’s terms. Two terms worth knowing: the waiting period is the time you’re off work before payments begin, and the benefit period is how long payments can last.
What that means for you: a back injury that keeps you off work for eight months may never qualify for the DSP. That’s the situation income protection is designed for.
How likely is an income protection claim to be accepted?
Industry claims data published by Moneysmart, from APRA and ASIC, covering July 2024 to June 2025, shows 94.4% of income protection claims through advisers were accepted, with an average decision time of 1.6 months. Group cover through super sat at 96.3% and 1.4 months.
These are averages, not a promise. Insurers can decline claims, for example where a condition isn’t covered or health history wasn’t disclosed. Compare that with the roughly 44% of DSP claims rejected.
Can the government change the rules?
Eligibility for government payments is set by government and can change. The terms of an income protection policy are set out in its PDS when you take it out, although premiums can change over time.
FAQs
Can I get JobSeeker and the Disability Support Pension together?
No. You can receive one or the other, not both.
Is the Disability Support Pension enough to live on?
It pays $1,237.70 a fortnight for a single person. It’s a basic safety net, not a replacement for your pay.
Does income protection cover short-term illness?
It can, depending on the policy’s terms and your waiting period.
Can I claim income protection if I’m on Centrelink?
You can lodge a claim, but Centrelink counts the payments as income, so you’ll need to tell Services Australia.
Want to see how your cover stacks up against Centrelink?
Book a 15-minute call with Phil to compare what your cover would pay against the numbers above: skye.com.au/book-a-call
Wondering if an AI chatbot can sort this out? We tested it: Can ChatGPT give you life insurance advice in Australia?
Want to hear it from the team? Neha and Phil unpacked it in a Skye Deep Dive: https://youtu.be/5oVfF7vv1B0
Always in your corner.
This article is general information only and doesn’t take into account your objectives, financial situation or needs. Consider whether it’s appropriate for you and read the relevant PDS before making a decision.