Income Protection Insurance NZ
Unpredictability is often the spice of life except in the event of an injury or illness. If you find yourself in a position of being unable to work due to immobility or sickness have you thought about how you may support yourself and your family?
Income protection insurance provides you with regular payments if you cannot work due to medical reasons. It provides a financial safety net so you can continue paying your ongoing expenses such as your mortgage and other household bills. Most policies will make the payments until you are able to work again or until you retire.
If you’re on the fence about purchasing income protection, it’s good to weigh up the cost of being covered vs. the risk of not being covered while taking into account the peace of mind it provides you. Learn how income protection insurance works. Contact MyFuture to help protect you and your family income in case of sickness or injury.
What is Income Protection Insurance?
Income protection insurance protects you if you were to face an illness or injury that stops you from working. The insurance provides regular monthly payments to cover any of your ongoing essential financial commitments you may have such as household bills and mortgage or loan payments.
Income protection means that although you are unable to work you don’t have to worry financially for your ongoing expenses, you won’t have to eat into savings, lose your home or have to rely on family.
Income protection insurance is different to critical illness or trauma insurance in that it pays out regular amounts instead of a one-off lump sum.
How Does Income Protection Insurance Work?
Income protection insurance works by:
- Providing a regular payment that replaces part of your income if you were to find yourself unable to work due to an accident or illness.
- Paying out until you can start work again or until you retire, die or reach the end of the policy term, whichever is sooner.
- Paying out between 50% and 65% of your income if you’re unable to work.
- Covering most illnesses that would leave you unable to work. Check for details about which illnesses your policy covers.
- Allowing you to claim as many times as needed throughout the timespan of the policy.
Most policies will have a pre-agreed waiting or ‘deferred’ period before the payments start after your accident or injury. These waiting periods could be 4, 13, 26 weeks or a year. The longer your waiting period the lower the premiums will be. If you are fortunate enough to have an employer who will pay you sick pay for longer periods you can opt to defer your income protection payments.
Get In Touch With One Of Our Income Protection Advisers
What Does Income Protection Insurance Cover?
Every policy will vary in the specific medical conditions that it covers. It’s important to read the fine print to find out what is covered, and just as importantly, what is not covered in a policy. Then you can make a wiser decision on which policy is best for you.
These are some of the main characteristics that are covered in income protection insurance:
- Some mental conditions such as bipolar or depression
- Some types of cancer
- Musculoskeletal problems relating to muscles and bones
- Heart conditions such as a heart attack or coronary bypass.
- Neurological conditions such as a stroke, Alzeimer’s disease and Multiple Sclerosis.
- Organ disorders such as chronic kidney failure and major organ transplants.
- Permanent conditions such as blindness, paralysis, loss of hearing, speech or limbs.
- Intensive care treatment
Do I need Income Protection Insurance?
Whether or not income protection insurance is right for you depends on what losing your income for health reasons would mean in your circumstances. As with most insurance, we hope it is never needed but it does provide a level of comfort in knowing you will be financially sound should something go terribly wrong.
Every year 50,000 New Zealand households find themselves with a family member who is unable to work for 3 months or more due to injury or illness. In this unfortunate scenario, income protection insurance adds a safety net.
You may benefit from income protection insurance if:
- Your family is dependent on your income.
- You are self employed
- You have a mortgage or other personal loans that require regular payments.
- You have limited savings or an emergency fund to cover expenses if you’re unable to work.
- You have a business with ongoing overheads.
If any or all of the above applies to you then it can be a huge benefit to protect you and your family with income protection insurance while you focus on recovery.
Very few employers will support their staff for more than a year if they’re off sick from work and depending on your level of savings, the loss of income can quickly leave you unable to afford the lifestyle you were living or even essentially paying household bills.
What to Look for in Income Protection Insurance Policies?
If you’re considering an income protection insurance policy then there are certain factors of each policy to compare, such as:
- Coverage – which conditions are covered and how does the policy define them?
- Exclusions – what isn’t covered by the policy?
- Premiums – How much will the policy cost you and will the premiums increase? Increased premium cover is called ‘stepped cover’ if it stays the same it is called ‘level cover’
- Benefit amount – What will the regular payments be in the event of a successful claim?
- Waiting periods – Some insurers impose waiting periods before you can make a claim.
There are many varying income protection insurance policies out there to consider with different coverage and benefits to you. Reach out to our experts at MyFuture today for your no obligation FREE discovery session to create a protection plan for you and your family.