Income Protection Insurance NZ

Protect your income if illness or injury keeps you from working.

Income protection insurance provides regular payments if illness or injury leaves you unable to work and earn your usual income. It can help you continue meeting everyday financial commitments such as your mortgage or rent, household bills and other living expenses while you recover.

Lifestyle Solutions helps New Zealanders compare income protection insurance options from a range of insurers to find cover suited to their income, occupation, financial commitments and circumstances.

Most employees only have a limited amount of paid sick leave available. If an illness or injury keeps you away from work for an extended period, income protection can provide an additional financial saftey net.

What is income protection insurance?

Income protection insurance is designed to provide regular payments if you’re unable to work because of an eligible illness or injury.

Rather than replacing your full income, income protection generally covers a portion of what you earn, subject to the terms of your policy. This can help you continue meeting important expenses such as your mortgage or rent, household bills, loan repayments and everyday living costs.

The amount of cover available, how soon payments can begin and how long they may continue all depend on the policy you choose.

Our role is to help you understand those differences and find an option that makes sense for you.

How does income protection insurance work?

When you take out income protection insurance, you choose a level of cover along with a waiting period and benefit period that suit your situation.

If you later become unable to work because of an illness or injury covered by your policy, you can make a claim with your insurer. Once the relevant waiting period has been completed and the claim has been accepted, regular benefit payments may begin.

How much you receive and how long payments continue will depend on your policy and circumstances.

Because income protection policies can vary considerably between insurers, it’s important to look beyond the headline premium and understand exactly what you’re covered for. We can help you compare the options and explain the details in straightforward terms.

What can income protection help pay for?

If your income suddenly stops, many of your regular expenses don’t.

Income protection insurance can help provide some financial breathing room while you’re unable to work, allowing you to continue managing costs such as:

• your mortgage or rent
• groceries and everyday household expenses
• power, phone and other utilities
• loan and credit repayments
• childcare and family expenses
• insurance premiums
• other ongoing financial commitments

How much income protection cover do I need?

There isn’t one level of income protection cover that suits everyone.

The right amount will depend on factors such as your income, regular expenses, debts, savings, existing insurance and whether there is another household income you could rely on.

Income protection policies generally allow you to insure a proportion of your income rather than the full amount. The exact level available can vary between insurers and policy types.

When we advise you on income protection insurance, we look at the bigger financial picture. The aim isn’t simply to take out the maximum amount of cover available – it’s to find an appropriate level of protection that helps meet your needs while keeping premiums manageable.

What is an income protection waiting period?

The waiting period is the length of time you need to be unable to work before eligible income protection payments can begin.

Different policies may offer different waiting-period options, and the right choice often depends on how long you could comfortably manage without your normal income.

For example, you may already have access to paid sick leave, savings, ACC payments or another household income. Someone with several months of savings may be comfortable with a longer waiting period, while someone with limited financial reserves may prefer cover that can start sooner.

Waiting periods can also affect the cost of your insurance, so this is an important part of comparing income protection policies.

We can help you weigh up the options based on your actual financial position rather than choosing a waiting period in isolation.

How long can income protection payments continue?

The benefit period determines how long eligible income protection payments may continue once a claim is being paid.

This is different from the waiting period.

The waiting period determines how long you wait before eligible payments can begin, while the benefit period determines how long those payments may continue.

The benefit periods available vary between insurers and policy types. Your occupation, age and other factors may also affect the options available to you.

When comparing income protection insurance, we’ll help you understand both the waiting period and benefit period so you know how the cover would work if you ever needed to claim.

How much does income protection insurance cost in NZ?

The cost of income protection insurance in New Zealand varies from person to person.

Your premium may be influenced by factors including:

• your age
• your health and medical history
• whether you smoke
• your occupation
• your income
• the amount of cover you choose
• your waiting period
• your benefit period
• the type of policy and optional benefits selected

We can compare income protection insurance options from different providers and help you understand the balance between the level of protection you want and what you’re comfortable paying.

If you would like to know what income protection could cost for your circumstances, talk to us about getting a personalised quote.

Income protection for self employed New Zealanders

If you’re self-employed, your ability to work is often closely tied to both your personal income and the financial wellbeing of your business.

Unlike many employees, you may not have paid sick leave available if illness or injury keeps you away from work. That can make an extended period without income particularly difficult.

Income protection insurance can help provide regular payments if you’re unable to work and meet the conditions of your policy.

The way income is assessed for self-employed people can be different from employees, particularly where business structures, drawings or fluctuating income are involved.

We can help you understand the options available and work through the level and type of income protection that may be appropriate for your situation.

Income protection insurance and ACC

ACC and income protection insurance can both provide financial support in certain circumstances, but they are not the same thing.

ACC primarily provides cover for eligible injuries, while income protection insurance may also provide cover where an illness prevents you from working, subject to the terms of your policy.

If you receive ACC or another form of financial support while claiming on an income protection policy, this may affect the amount payable by your insurer depending on the policy you hold.

This is one of the reasons it is important to understand how your cover fits alongside the protection you already have.

We can help you look at your overall situation and explain how income protection insurance may complement other forms of financial support available to you.

Is income protection insurance right for me?

Income protection insurance can be worth considering if your household depends on your income to meet its regular financial commitments.

A useful question to ask yourself is:

How long could I comfortably manage if my income stopped tomorrow?

You may want to consider income protection if you:

• have a mortgage or other significant financial commitments
• support children or other family members
• rely primarily on your own income
• have limited savings available
• are self-employed
• would find it difficult to manage financially during an extended illness or injury

That doesn’t mean everyone needs the same type or amount of cover.

A conversation with an adviser can help you understand your risks, what protection you already have and whether income protection insurance is appropriate for you.

Compare income protection insurance options

Income protection policies can differ in more ways than price.

Waiting periods, benefit periods, policy definitions, claim conditions and additional features can all vary between insurers.

Lifestyle Solutions works with a range of New Zealand insurance providers, which means we can help you compare appropriate options rather than looking at one policy in isolation.

We’ll take the time to understand your income, occupation, family situation and financial commitments before making a recommendation.

Just as importantly, we’ll explain the options in plain English so you understand what you’re paying for and how your cover is designed to work.

Talk to the Lifestyle Solutions team about your income protection options or request a personalised quote.

Income protection insurance FAQs

What is income protection insurance?

Income protection insurance provides regular payments if an eligible illness or injury leaves you unable to work. It is designed to replace a portion of your income so you can continue managing everyday financial commitments while you recover.

How much of my income can income protection cover?

Income protection policies generally cover a proportion of your pre-disability income rather than the full amount. The level available varies between insurers and policy types, so it’s important to check the specific terms of the cover you’re considering.

How long do income protection payments last?

This depends on the benefit period included in your policy. Different insurers may offer different benefit-period options. Payments will also depend on you continuing to meet the relevant claim conditions under your policy.

What is an income protection waiting period?

A waiting period is the amount of time you need to be unable to work before eligible benefit payments can begin. Choosing the right waiting period often involves considering your sick leave, savings, household income and other financial support.

Can self employed people get income protection insurance?

Yes, income protection insurance may be available to self-employed people. How your income is assessed and the cover available will depend on your circumstances, business structure and the insurer’s requirements.

Does income protection work alongside ACC?

It can. ACC and income protection insurance provide different forms of protection, and payments from ACC may affect an income protection claim depending on the policy. An adviser can help explain how the different types of cover may work together.

How much does income protection insurance cost?

Premiums vary depending on factors such as your age, health, occupation, income, level of cover, waiting period and benefit period. Comparing policies is important because both the cost and the cover provided can differ between insurers.

Still need convincing, in this blog Richard explains the key elements on income protection insurance.