Compare Best Income Protection Insurance NZ 2018-06-19T22:15:22+00:00

Compare Best Income Protection Insurance in New Zealand

Income Protection Insurance New Zealand

If you are unable to work due to an illness or injury who will pay the mortgage, taxes, food, car repayments and other expenses? Income Protection insurance!

Think about it.

More and more Kiwis are affected by burnout, anxiety and work-related stress.

If you or your dependents are reliant on your paycheck and income, then consider income protection insurance because income protection guarantees a regular weekly, fortnightly or monthly income, when you cannot work.

An optional income protection insurance add-on benefit is the Redundancy Insurance.

What would happen if suddenly, due to an illness or injury, you were unable to work?

Recent research finds that more than 1,000 families a week – 54,800 a year, experience a sickness that prevents main income earner from working for three months or more.

1 in 4 Kiwi’s is covered by Income Protection Insurance.

By comparison, around 4 in 5 Kiwi’s have their vehicles insured.

An income of $60,000 a year for 30 years comes to $1,8 million, much more than the value of most homes.

Yet many New Zealanders believe that the house is the most valuable asset.

How wrong!

Your most valuable asset is your ability to make a living, your ability to work and earn an income.

And this is where an Income Protection Insurance benefit payout can make the difference for many families.

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How does income protection insurance work?

Income Protection Insurance in New Zealand is a policy that pays a weekly, fortnightly or monthly benefit for 2 or 5 years, or until age 65 or 70, to the person insured who is unable to work due to illness or accident after an agreed waiting period of between 2 – 104 weeks.

Compare Income Protection Insurance for a minute.

Which Job would you choose?

Job A without any income protection and Job B with income protection insurance.

That’s pretty incredible aye?

Now, look at the following chart and imagine your future income and earnings.

Do I need to ask if you consider your ability to earn an income significant enough to ensure your future earnings potential?

How much income could you lose?
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Why you need Income Protection Insurance

The chance of missing months or years of work because of an injury or illness may seem remote, especially if you’re young and healthy and you work at a desk.

But each year a staggering 54,800 New Zealanders are impacted by someone in their household being unable to work for three months or more due to illness.

To break it down.

That’s equal to 150 Kiwi’s every day, that is impacted by a disability that prevents you and me from work and thereby earning an income.

The actual claims are evidence that more and more Kiwi’s protect their future income.

And here’s the proof.

Income Protection Insurance, ACC & WINZ

Accident Compensation Corporation shortened ACC compensates as the name implies for accident-related incidents.

ACC state on their website that:

“ACC pays up to 80% of your income as weekly compensation if you’re unable to work because of an injury ACC is covering. This means you’ll still get paid while you recover.”

Two details catch my attention.

Firstly unable to work because of injury and second injury that ACC is covering.

Wow!

While ACC provides cover for specific injuries, ACC does not offer a blanket cover-all solution.

Here is an example of the physical injuries ACC cover. Get the complete overview here.

A physical injury is when there is actual damage to your body. This includes:

  • sprains or strains – such as ankle, back, knee or shoulder sprains
  • wounds – cut, broken or bruised skin
  • burns
  • fractures
  • dislocations
  • dental injuries
  • hearing loss
  • loss of consciousness.
Thankfully there is more to Income Protection Insurance than ACC.
Here’s a recent headline from New Zealand Herald.
More to Income Protection than ACC

Government benefits are unlikely to cover your living and lifestyle expenses.

You can only claim from ACC if you suffer an accident.

WINZ, Supported Living Payment net weekly benefit to a single person is $269.15.

Supported Living Payment is for people who are not able to work because they are:

  • restricted in their capacity for work because of a health condition, injury, or disability or totally blind or
  • caring for a person who requires full-time care and attention at home
Clearly the Supported Living Payment benefit is to help with bare minimums.
Here another headline from Stuff.co.nz
ACC causing unacceptable harm - headline from NZ Herald
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Compare Income Protection Insurance

Use the table below to compare Income Protection Insurance options to find out which one is best for you.

wdt_IDFeatureLoss of EarningsLoss of Earnings PlusMortgage and Living Cover
1Worldwide 24/7 Cover✔︎✔︎✔︎
2Your Benefit AmountUp to 75% of your pre-tax monthly salaryUp to 75% of income or 115% of Mortgage/Rent - max $7,500 per month
3Waiting Period2 Weeks - 104 Weeks2 Weeks - 104 Weeks2 Weeks - 104 Weeks
4Benefit Period2 or 5 years, or to age 65 or 702 or 5 years, or to age 65 or 702 or 5 years, or to age 65 or 70
5Transition to Level Premiums✔︎ - no further underwriting✔︎ - no further underwriting✔︎ - no further underwriting
6Tax Deductible Premiums✔︎
7Redundancy Cover Option✔︎✔︎✔︎
8ACC Offsets✔︎
9Homemaker support benefit✔︎
10Rehabilitation and Retraining Support.✔︎✔︎✔︎

How much does Income Protection cost?

The premiums for Income Protection will depend on a variety of factors.

Age is significant and the younger you are, the lower the premiums are.

Your job will have a importance on how much you pay.

As late as last week a gentleman that works as a linesman purchased income protection. His area of expertise compared to that of an office worker are two completely separate risk categories. Therefore the linesman premiums are higher than the office worker.

The same linesman was deferred income protection through a bank as it was considered too risky business for the bank.

Here’s an example of a 35 yo male, non-smoker, office worker, 90 days waiting period and 2 years benefit period.

wdt_IDFeatureLoss of EarningsLoss of Earnings PlusMortgage and Living Cover
1035 yo Male, non-smoker, AA occupation$45.28 p/m$47.00 p/m$40.27 p/m
12Benefit Per Month $6,250$6,250 $4,944
13Premiums Tax Deductable✔︎✔︎
14Benefit Taxable✔︎✔︎
Testimonial from Kathrine

Common question around Income Protection

You can save on your Income Protection Insurance premiums by extending your waiting period. You need to consider if you can finance the waiting period yourself possibly without an income from your employer. Perhaps you have enough savings and sick leave up the sleeve during the waiting period.

Conclusion

There are lots of benefits to being covered by income protection.

Firstly, the satisfaction that your financial situation is more secure. That you are guaranteed a paycheck if you cannot work.

Secondly, there are more definite benefits for you to consider, dependent on policy and add-on options you choose.

  • Recurrent Disability: Your benefit will continue straight away if you’re affected by the same disability within 12 months of being back at work – waiving your waiting period.
  • Disability Reset: Following a claim on Your Income Protection Insurance Policy that has either 2 or 5-year benefit, the benefit period will be reset. This allows you to claim for a new or related illness if the need arises.
  • Accommodation: Pays for your family to be with you if they live more than 100km away.

There are many banks and insurance companies that offer Income Protection Insurance.

The ones that stand out in the crowd offer a seamless transition to fixed premiums and pay your premiums while you are on claim.

And finally, the premiums you pay can be claimed on your annual income tax return.

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