What is Income Protection?
Income Protection provides you with a monthly benefit if you are unable to work due to sickness or injury.
Why do I need Income Protection?
An ongoing income is important to protect your current lifestyle if you are unable to work for any length of time. Income Protection gives you a steady stream of income if you’re unable to work due to sickness or injury.
Doesn’t ACC cover me for that?
Many people mistakenly assume that ACC will take care of them if they can’t go to work. ACC only provides cover for injuries that are the result of an accident. Unlike ACC, income protection covers non-accidental reasons for being off work, such as stress (the biggest cause of people needing time off).
Do I have the right cover?
The difference between agreed value and indemnity cover is the amount of certainty at claim time.
Agreed Value policies require you to prove your income when you apply (usually an average income over 2 or 3 years – helpful with you are self-employed and your income fluctuates). Indemnity policies require you to prove your income at claim time (which isn’t always easy).
We recommend products that provide certainty at claim time – so you get what you are paying for. Where possible, we recommend Agreed Value policies.
When I claim, how long do I need to wait before I get my money?
You choose – most people go with either one, two or three months… the longer you can wait, the more affordable your premiums. That’s why it’s important for you to think about how quickly you would need the money if you got sick and couldn’t work.
Most insurance companies pay their income protection policies in advance. For example, if you have a one-month stand down and are off work for a month, your policy will begin paying at the end of one month. Others pay in arrears, so if you have a one-month stand down period and you’re off work for a month, you won’t receive your payment until you have been off work for two months.
Your stand down period has a big effect on how much you pay in premiums – the shorter the stand down, the higher the premium. Consider how much income you need as a minimum and think about whether or not there is more than one income coming into your household.
It really depends on your situation… that’s why you need our advice.
How long does it pay? Well that depends…
There are numerous options you can choose. We recommend as long as you can… right through to retirement age. That way when a claim happens you keep receiving your money until your doctor says you can go back to work, or if you can’t go back to work you receive your money right through to age 65 or 70.
By choosing the longest payment term, you have the most choice at claim time. If you were to claim in your 30’s and could never work again, a five year payment term would not be sufficient to provide for your family long-term.