Income insurance protects your most important asset
While none of us want to think about suffering an illness or injury, every week thousands of New Zealanders find themselves in that exact situation.
To answer if you need income protection insurance, ask yourself:
- If something happened to force you to stop work, could you survive on sick pay and/or savings?
- How long would you be able to survive without an income?
- How would you pay the bills if you couldn’t work due to such an illness or injury?
Income Cover insurance protects your most valuable asset – your ability to earn – by guaranteeing you a regular income to cover your essential expenses. This offers you and your family peace of mind knowing you will have an ongoing monthly income to meet your personal expenses.
Income protection is available for wage earners, salaried employees, and self-employed individuals.
Firstly, what is Income Protection insurance?
Income Protection insurance literally insures your income against the risk of illness or injury that stops you working. If this does happen to you, your Income Protection insurance will provide you monthly payments to cover your mortgage or rent and household bills.
What does Income Protection Insurance provide?
Of course, every provider is different so it’s important to talk to your insurance broker or advisor to get on a plan that’s right for you. But Income Protection insurance can offer:
- Return to work reward payments
- Retraining benefits for approved training programmes, so you can gain new skills and return to the workforce
- Rehabilitation payments which pay out an extra amount on top of your other income protection benefits, such as an additional 50 percent for every month you participate in a rehabilitation programme
- Various childcare assistance benefits. This is intended to help with additional childcare costs that may be faced such as a live-in nanny or other care
- Reimbursement for costs incurred as a result of emergency transport recommended by a doctor
- Redundancy benefits – which is not covered by most income protection policies
- Reduced or no waiting periods if you’re confined to bed for a set period
- Options to continue your Kiwisaver contributions while you’re unable to work so your retirement won’t suffer.
- Death benefit is also included with some providers where upto 3 times your cover amount will be paid upon death, this is especially valuable for those clients who may not have had much Life insurance.
- Taking unpaid leave to look after a dependant who may need full time care, this will obviously impact on your earnings so makes sense to have a product which can cover this claim also.
- Brining you home – if you have been working overseas this will help cover the cost of you coming back home as well as a companion.
- For those on a tight budget, more basic versions of income insurance are also available, including mortgage repayment insurance. This pays a reduced amount, but still offers a degree of assistance
There is a huge raft of benefits in addition to these and this is something we can work through together to get you the best cover.
But we have ACC….
ACC is very specific in what it covers, and won’t cover illnesses or anything that isn’t an injury. If you have an accident and injure yourself, ACC will pay medical costs, physiotherapy treatment and up to 80% of the pre-injury salary until you can return to work. But if the injury is complicated by a pre-existing condition, then all entitlements (care, recovery and compensation) may be denied.
Many New Zealanders are confused by what ACC covers and whether income protection insurance overlaps. Each provides very different benefits, even if they look similar.
Income protection insurance is far more extensive and doesn’t discriminate on the cause of injury or illness.
How much cover do you need?
Most commonly, you can insure up to 75% of your regular income even though you cannot work. You are only covered up to this percentage of your income because there should be an incentive for you to return to full-time employment when you have fully recovered.
Income insurance policies are highly adjustable to your individual circumstances. However, the amount that you need will depend upon a range of factors including your pre-disability income, your monthly expenses, and of course your budget. Halo Advisers Ltd are happy to help you work this out and simplify the benefits for you.
Flexible payment periods
You can also choose policies that will pay a benefit for different periods including 12 months, 2 years, 5 years, or even until age 65 or 70, provided you’re still unable to work. Naturally, the longer the payment period, the higher the cost, and the shorter the period, the lesser the cost.
Flexible waiting periods
When you establish a policy, you choose how long you must wait before you receive a claim. The longer the wait period, the lower the premium. Of course, the shorter the wait period, the higher the premium. Depending on the insurer, you can choose from 2, 4, 8, 13, 26, 54 and 104 weeks.
Can I purchase income insurance online?
Many insurance companies especially banks now provide the ability for you to purchase income insurance (and other insurances) online. In most cases, this is not recommended because of:
- The technical complexity of this type of insurance, including different insurers offering a wide variety of different benefits and features, and the wide range of options available when establishing such insurance. Most individuals will not have any chance of understanding the terms, benefits, and different features explained at length by the insurance provider in pages of fine print containing legal and health jargon. Perhaps most important among this fine print are the exclusions under each policy.
- The disclosure requirements needed with all insurance. Whether purchasing income insurance on or off line, the first step is completing the application form. When filling forms online, you do not have a guide to assist you, including overseeing the completeness and accuracy of your details. Therefore, if you’re purchasing online you need to be extremely careful to ensure all the details entered are accurate and leave nothing out. An insurance company can reject a claim outright if it later comes to light that key information provided is incorrect or is missing something – for example regarding your medical history.
- The need for the right amount of cover. A thorough assessment needs to take place to explore key factors related to this area of insurance, including your line of work, budget, dependants, family situation, family medical history, your personal medical history, assets and liabilities, expectations for cover, commitments, and income.
What next?
With the protection of your most important asset at stake – your income, what have you got to lose by making a phone call to check your situation?
For a complimentary, no obligation chat, please feel free to contact Halo Advisers Limited, who are insurance advisors in Auckland on 0211835835 or email us on info@haloadvisers.co.nz