Wondering if you need income protection insurance? In this quick guide, we’ll share what income protection insurance is, how it works, and who can benefit from it. Read on to learn more.

What is income protection insurance?

Let’s start from the basics. Income protection insurance is designed to replace up to 75% of your pre-tax, pre-disability income if you become unable to work due to a serious illness or injury.

To tailor this powerful protection tool to your needs and budget, you can choose:

• Payment amount: the percentage of income replacement you need.
• Payment period: for how long you’d like to receive the payment, generally two years, five years, or until age 65 or 70. In any case, your income protection payments stop once you’re able to return to work.
• Wait period: how long you can wait between before your insurance payments start after being off work with the illness or injury (options usually range for periods between one month to two years).

The combination of these three factors helps determine your premium costs as well.

Do you need it, if you already have ACC?

Many New Zealanders think they already have income protection because they can turn to ACC. But while the ACC scheme is undoubtedly a valuable resource, it can help in case of accidental injuries. However, that means that if you’re unable to work due to a serious illness, ACC will not be able to step in.

Income protection, on the other hand, offers a broader safety net. Policies usually cover a wide range of scenarios, including but not limited to sickness, injury and mental health conditions.

Do you need income protection?

Whether you need income protection insurance depends on your unique situation. The key question to ask yourself is: what would happen if I were suddenly unable to work? Would my family be able to continue to meet my financial commitments, like rent or mortgage payments?

Income protection insurance could help you and your loved ones maintain your current lifestyle, even if you were unable to earn your regular income for an extended period.

Unsure where to start? Please don’t hesitate to contact us: we can help you assess your circumstances and explore your options.

Here to help

With so many features to choose from, finding an appropriate income protection insurance policy can be challenging. But it doesn’t have to be.

Get in touch with our SHARE advisers. We can guide you through the options, from wait periods to benefit limits, helping you get a policy that’s tailored to your situation. Plan today for a more financially secure tomorrow.

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.