WHAT IS INCOME PROTECTION INSURANCE?
Income Protection Insurance will replace your income when you are unable to work because of sickness or accident and is normally it is paid as a monthly benefit.
It’s designed to ensure that you can still afford to meet your household expenses and financial obligations while you are unable to work, and will continue to do so until your policy expires or you can return to work.
HOW DOES INCOME PROTECTION INSURANCE WORK?
Regardless of whether you have an accident at work or away from work, or a sickness stops you from working, money is paid into your bank account each month to use as you see fit.
When you take out an Income Protection Insurance policy, you choose how long you are prepared to wait, before you need the insurance company to start paying you your replacement income. The longer you can wait, the cheaper your premiums will be.
You can also choose how long you would like to get your benefit paid to you, and the shorter the term the cheaper the premium. For example, if you wanted the insurer to pay you for up to 2 years, then your premium would be cheaper than if you wanted them to pay you up until age 65.
DO I GET PAID ON TOP OF A.C.C?
If you are unable to work and A.C.C is paying you for the same disability that you want to claim for, then your insurer will not pay on top of A.C.C. That said, if A.C.C pays you less than what you are insured for, then your insurer will top up the difference.
There are similar solutions which do pay on top of A.C.C so if this is what you are looking for, please let me know. It is important to note, that A.C.C is for accidents, not sickness.
HOW MUCH CAN I INSURE FOR?
You can insure up to 75% of your income before tax. Some income protection policies also have additional built-in benefits as part of the policy, for example, if you break bones you can get a lump sum payment.
Non-Cancellable does not mean you cannot cancel your policy, you can cancel anytime you like. Regardless of how many claims you have, most income protection policies cannot be cancelled by the insurer.
There are certain conditions where an insurer can cancel your policy such as non-payment of premiums or non-disclosure, but certainly not because you are having lots of claims.
WHEN AM I ELIGIBLE TO CLAIM?
In most income protection policies, the definition of being disabled is “unable to perform your own occupation for more than 10 hours per week”. Some policies have variations of this, so check your policy or contact us and we can look into this for you.
WHY SHOULD YOU HAVE INCOME PROTECTION INSURANCE?
We are fortunate that we have an A.C.C system in New Zealand but it’s not foolproof and only provides for accident compensation and not sickness.
In long-term A.C.C cases, your case may be moved to a different classification and become a sickness beneficiary which is called Supported Living Payment. You can view more of this benefit at this link here.
Here are my top 5 reasons why you should have your own income protection insurance.
- You are covered for accident and sickness.
- You know exactly where you stand with black and white documentation.
- Benefits are always inflation adjusted.
- Your private cover will top up any ACC shortfall.
- You can have your Income Protection agreed from outset, so regardless f your income at claim time, you will be entitled to claim what you are insured for.
For higher income earners, ACC will only assess a maximum income of $124,053 and pay a maximum of 80% of that. Higher income earners should have their own private income protection.
If you do not have your own Private Income Protection we can find something which meets your needs and budget, and if you already have your own income protection and have not reviewed in the last 2 years then we should do that as well.
Please contact me anytime so we can help you get paid when you need it most.