What is Income Protection Insurance?

Life can throw curveballs, and sometimes those curveballs stop us from working. Whether it's an illness or an injury, being unable to earn an income can be a massive financial stress. That’s where income protection insurance comes in. It’s designed to replace a portion of your income if you can’t work for a certain period due to health reasons.

How Does Income Protection Work?

The Basics

Income protection insurance pays you a percentage of your income—usually up to 75%—if you’re unable to work due to illness or injury. The payments kick in after a set waiting period and continue for a set period, depending on your policy.

Key Features

• Waiting Period: This is how long you have to wait after becoming unable to work before you start receiving payments. It can range from a few weeks to a couple of years.

• Benefit Period: This is how long the insurance will pay you while you're off work. Options include two years, five years, or until retirement age.

• Taxable Payments: In New Zealand, your income protection payments may be taxed, this is dependent on the type of income protection products in your plan. The premiums you pay for the policy may be tax-deductible.

• Rehabilitation Support: Some policies help with rehabilitation and retraining to get you back to work sooner.

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Do You Need Income Protection Cover?

Not everyone needs income protection, but if you rely on your income to pay for rent, mortgage, bills, and everyday expenses, it can be a financial lifesaver. If you don’t have significant savings or other financial support, it’s worth considering.

How Much Does Income Protection Cover Cost?

The cost depends on:

• Your age and health – Younger, healthier people tend to pay lower premiums.

• Your occupation – Riskier jobs might have higher premiums.

• The waiting period – A longer waiting period usually lowers your premium.

• The benefit period – A longer payout period can make the policy more expensive.

  
  

FAQs About Income Protection

What does income protection cover?

It typically covers loss of income due to illness or injury but may exclude pre-existing conditions or self-inflicted injuries.

How long do I need to be off work before I can claim?

It depends on your policy’s waiting period, which can be anywhere from two weeks to several months.

Can I still get income protection if I’m self-employed?

Yes! Self-employed individuals often benefit from income protection since they don’t have employer-provided sick leave.

Is income protection the same as ACC in New Zealand?

No. ACC covers injuries but doesn’t cover illnesses. Income protection can cover both.

FAQs About Income Protection

What’s the difference between life insurance and income protection?

Life insurance pays a lump sum to your family when you pass away, while income protection helps replace your income if you can’t work due to illness or injury.

Can I have both life insurance and income protection?

Yes! Many people have both to ensure full financial protection.

Does life insurance cover terminal illnesses?

Some policies do. They might pay out early if you're diagnosed with a terminal illness.

FAQs About Pulse Advice

Who is Pulse Advice?

Pulse Advice is a modern, customer-focused financial advice company helping Kiwis make smart decisions about their income protection, KiwiSaver, and financial future.

How can Pulse Advice help with income protection?

We help you choose the right policy based on your lifestyle, job, and financial situation so you get the best cover without overpaying.

Do I need to be earning a certain amount to get income protection?

No. If you have any regular income, you can get coverage to ensure financial security if you’re unable to work.

How do I get started with Pulse Advice?

Getting started is easy! Contact us for a no-obligation chat to find the right income protection for your needs.