Tips

If you are unable to work due to illness your lost income may be replaced with an Income Cover or Income Protection. Income cover is a long term lifestyle and income protection solution.

In New Zealand we are fortunate to have ACC which covers accident claims. Because of this, many New Zealanders may be covered by sub-standard policies, or not at all.

There are a few things to consider when deciding on income protection and to help you we have summarised them for you

Wait Period

The wait period is the time you will have to wait before you receive your income cover or income protection monthly claim payment from your insurer. The periods are 4, 8, 13, 26 or 52 weeks.The longer the wait period the lower your income cover premium may be.

It is recommended that you take into consideration any sick leave and holiday or leave pay you may have and include any savings which you may have set aside for this purposes.

Payment Period

This is the period for which you would want to continue to receive your monthly income cover in the event that you are unable to work. The longer the period the higher you premium will be.

We recommend our clients consider the “to age 65” which would provide a long term financial solution and peace of mind.

It is important that you are aware that bank income covers may only offer a limited benefit payment period of 6 to 12 months where other insurers offer a payment period options of 2 or 5 years or to age 65.

Types of Income Cover

      • Agreed Value:– At the time of submitted your application, the insurer will assess your level of cover. You may be insured up to 62.5% of your earnings. The benefit you receive at claim time is not taxable.
      • Indemnity Value:- At the time of claiming you will be required to prove your loss of income. For this type of income cover you may be insured up to 75% of your earnings. As this is a taxable income cover you may claim tax paid on premium as the payment received when on claim is taxable.

Having experienced the benefit of an agreed value income cover it is my opinion that as it provides a guaranteed amount you have peace of mind knowing that you do not need to be chasing up accountants for your financial statements or your boss for payslips to prove your income when you should be concentrating on recovering from your injury or illness.

ACC what do I get?

If you are disabled in an accident and are unable to work ACC may replace up to 80% of your income. ACC does not cover illness or injuries that occur gradually. This is why you should have personal income protection.

It is important to take into account that if you are receiving your full weekly entitlement which is 80% of your income, your personal income protection unless it is a Business Income Protection or a Loss of Earnings Policy will not be liable to make any payments to you.

For more information on what may suit your personal requirements or to answer any questions you may have, give us a call. We are the experts here to give you a helping hand.