What is Income Protection Insurance

If you are like the vast majority of kiwis, your ongoing income is your biggest asset and allows you to maintain your lifestyle and plan for the future. And for those with important financial commitments such as a mortgage or family, having income insurance is necessary to allow you to continue meeting those financial commitments should the worst happen.

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Income protection can protect your income by providing you with a replacement income should you be unable to continue working due to a serious accident or illness (remember that ACC only provides a replacement income in the event of an accident). Although there are different names for income insurance, such as mortgage and living protection or loss of earnings cover, all essentially provide a replacement income in the event that something goes wrong and you cannot continue working in either the short or long term.

 

When deciding what type of income insurance would be best for you, there are various factors to consider such as; are you on PAYE or self-employed? In general, income protection for PAYE employees is straightforward, but cover for those who are self-employed can be a little more tricky due to income fluctuations, ACC entitlements and financial offsets. However, there are strategies that can be utilised to reduce total premiums and ensure you are protected adequately.  You can read more about income protection insurance for self-employed people here.

 

At the end of the day, no matter what type of income insurance you select, it is important to access professional advice as you need to ensure that you understand what you are covered for and have peace of mind.

To compare and see what income protection insurance may best work for you compare here