How long could you and your family ‘survive’ financially without your income? One year, six months – one month only?

Your income is the financial foundation of your life – the biggest asset you have after your health. It allows you to cover your living expenses and meet other financial commitments, like mortgage repayments. So, what if you suddenly lost it due to a serious illness or injury?

Income protection insurance is designed to help you protect your lifestyle from this ‘what if’ scenario. Here are some key things to know about it, according to our SHARE advisers.

It can replace up to 75% of your income

With income protection, you can choose to replace up to 75% of your gross pre-disability income if you’re unable to work for an extended period due to injury or illness.

You also need to select how long before your claim pays out (‘waiting period’), and for how long you want to receive your payments (‘benefit period’).

These three factors (replacement percentage, waiting period and benefit period) will determine your premium amount, so it’s important to consider your short-term budgeting needs as well.

Who is income protection for?

Many people in New Zealand believe that ACC would cover them should they be out of work. But as helpful as the scheme is, it’s only designed to replace some of your lost income due to accidental injuries, whereas income protection covers some of your lost income due to serious illnesses as well.

So, whether you’re an employee or self-employed, income protection is worth considering if your financial life depends on your ability to an earn an income.

Other benefits of income protection

Depending on the insurer, there can be extra good reasons for taking out income protection. These include things like total or partial disability benefits, vocational training and rehabilitation benefits (to help you return to employment), or recovery support benefits (to pay for specialised equipment, like wheelchairs or home modifications).

Some policies also offer financial support to family members who provide you care, replacement benefits for the self-employed (to hire someone who can run the business in your absence), and even relocation benefits.

If you’d like to take a closer look at different policies and their features, please don’t hesitate to contact us. We can walk you through what’s available and how it relates to your needs.

Income protection and life insurance

If you already have life insurance, you may be wondering if income protection is worth considering.

Generally speaking, life cover will only step in if you pass away or have a terminal illness. On the other hand, income protection can provide your family with much-needed financial support while you’re still alive, if you suddenly lose your earning ability due to injury or illness.

In other words, these two types of cover provide a very different level of protection, and depending on your circumstances, you may consider adding both to the mix. Get in touch if you’d like to learn more.

We’re here to help

Protecting your income from the unexpected can give your family the breathing space you need to focus on your recovery. But whether you need it or not depends on your situation.

Like to know if income protection is for you? Talk to a SHARE adviser near you.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.