Income Protection
Replace your income if illness or injury stops you from working.
What Is Income Protection?
Income protection insurance answers one of the most important financial questions in personal risk management: what happens to my family's finances if I can't work for 6 months? Or 2 years? Unlike ACC, which only covers accidents, income protection covers both illness and injury — including cancer, mental health, heart conditions, and back problems, which are the most common reasons working-age New Zealanders stop working.
Most policies pay 75% of your pre-disability income, with a waiting period (typically 4, 8, or 13 weeks) before payments begin. The waiting period you choose affects your premium — a longer wait means lower premiums but greater need for savings to bridge the gap. Benefit periods can range from 2 years to age 65, and the longer the term, the more valuable the cover.
For self-employed business owners, contractors, and sole traders — anyone without an employer's sick leave safety net — income protection is arguably the most critical insurance they can hold. If your income stops, everything else follows: mortgage, rent, car payments, children's costs. A good income protection policy keeps those running regardless of your health.
What's Covered
Up to 75% of pre-disability income replaced
Monthly benefit paid directly to you
Covers both illness and injury (unlike ACC)
Waiting period options: 4, 8, or 13 weeks
Benefit period up to age 65
Own-occupation or any-occupation definitions
Partial disability benefit for reduced work capacity
Inflation-linked benefit increases available
Who Needs Income Protection?
Self-employed workers and sole traders with no sick leave
Anyone whose income would stop within weeks if they couldn't work
Business owners whose company relies on their direct involvement
Professionals with large mortgages and lifestyle commitments
Employees with inadequate sick leave or savings buffer
Real Claim Scenarios
Self-employed plumber with back injury
A Palmerston North plumber ruptured a disc and was unable to work for 7 months. ACC covered his accident-related medical costs but not his full lost income.
His income protection policy topped up to 75% of his pre-injury income from week 5. He received $4,800/month for 6 months — covering his mortgage, vehicle finance, and living costs entirely.
Cancer treatment for a Wellington lawyer
A 46-year-old lawyer was diagnosed with lymphoma and underwent 8 months of chemotherapy. She could not work during treatment.
Her income protection policy paid $6,200/month throughout her treatment. She returned to work after full recovery with no financial damage to her practice or lifestyle.
NZ Providers Offering This Cover
A licensed adviser compares all of these on your behalf at no charge.
Partners LifeRECOMMENDED
Market-leading income protection definitions
AIARECOMMENDED
Strong rehabilitation benefits and return-to-work support
Southern Cross
Reliable claims and established product
nib
Competitive premiums for professionals
Accuro (now UniMed)
Bundled income + health options
What Affects the Cost?
Premiums for Income Protection vary between individuals. These are the key factors that determine your rate:
Occupation class — high-risk occupations pay more
Waiting period — longer waits mean lower premiums
Benefit period — 2-year cover vs. to-age-65 cover
Income level — higher income replaced costs more
Definition of disability — own-occupation vs. any-occupation
Frequently Asked Questions
What does Income Protection actually cover?
Income protection insurance pays a monthly benefit — typically 75% of your salary — if you are unable to work due to illness or injury. It is essential for self-employed Kiwis and anyone without adequate sick leave.
How much does Income Protection cost per month?
Income Protection starts from $35/month for a healthy adult, but your actual premium depends on your age, health history, chosen excess, and level of cover. A licensed adviser will get you an accurate personalised quote from all major providers.
Are pre-existing conditions covered?
Pre-existing conditions are typically excluded from cover, or may be subject to a premium loading. The definitions vary by insurer, and some conditions may be covered after a stand-down period. An adviser will help you understand each provider's approach before you commit.
How do I claim?
Most NZ insurers have a smartphone app for submitting claims. For surgical or hospital claims, your specialist or hospital typically handles the claim directly. For everyday cover claims, you submit receipts and are reimbursed within a few business days.
Ready to Compare Income Protection?
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External resources: PHARMAC (funded medicines) · Health New Zealand (Te Whatu Ora) · FMA — Insurance guidance
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