When you think of your most important financial assets, you might think of your house, your car and your KiwiSaver account. You could be missing the most important one, though – your income.

Your ability to earn income throughout your working life is a financial asset that can be worth many times the value of things like a home or investments. It helps you make the payments on your mortgage or rent, pay your bills, cover childcare costs, as well as allowing you to progress towards future goals.

Without your income, your financial life would probably look significantly different.

The asset that’s often missed

People often insure their physical assets, such as their homes and contents or vehicles, against the risk that something could happen to them. Sometimes, we may forget about insuring the income that allows us to have these things.

New Zealanders have a relatively high uptake of residential insurance by international standards but only about 20 percent of us have personal income protection insurance.

Being off work can be expensive

If illness forced you to take time off work, would you be able to survive financially? Many households could get by for a little while, but it may be the case that an extended period without work could become a serious financial headache. In such circumstances you might face tough choices about your lifestyle or where you live.

Things like short-term savings can help to provide a buffer, and many people have sick leave entitlements from their workplace, but these come with a time limit. ACC will only cover situations where there has been an accident, not an illness, and if you have a partner who is in work it could be that your household income is too high to qualify for a sickness benefit.

This is where income protection insurance can be a significant help. It is designed to step in and take some of the financial stress off you so that you can focus on your recovery, not the household bills.

Income protection as part of the picture

Many people choose to have income protection insurance alongside other types of personal insurance, such as life insurance and trauma insurance. These covers can serve different purposes and may work alongside each other in certain situations.

For example, if you experienced a serious illness or injury that met the terms of your trauma policy, you might receive a lump-sum payment. If the same event meant you were unable to work, your income protection cover may also provide regular benefit payments, subject to the policy terms.

Understanding how different types of cover may respond can be confusing. We can help explain what each policy is designed to do and how they may work together in different circumstances.

Make it work for you

Income protection insurance is not a one-size-fits-all solution. Your policy can be structured around your individual circumstances, including how long you wait before benefit payments begin if you are unable to work, and how long those payments could continue.

These choices can influence both the level of cover available and the cost of your policy. We can help you understand the options and consider an approach that provides appropriate protection while fitting within your budget.

Let us help

Being off work because of illness isn’t just something that happens to other people. Our SHARE advisers can help you access the peace of mind that income protection insurance cover can offer, so that you know you and your family will be able to keep your household running, even if life throws something unexpected your way.

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.