Income Protection Insurance

Helps keep your finances healthy if you can’t work because of illness or injury

Fidelity Life Insurance
Partners Life

What is Income Protection Insurance?

Income protection insurance covers a portion of your monthly income if you suffer from an injury or illness that prevents you from working. It provides financial security for you and any loved ones who may depend on your most valuable asset — your ability to earn a paycheck.

Without income, even temporarily for six months, the majority of Millennials and
Gen Xers say they would feel a significant financial burden.

And while many people believe that disabilities are mainly caused by injury, the majority of disabilities are caused by illness. Another common myth is that most disabilities occur at work, but only 10% of all disabling accidents or illnesses occur at, or are related to, work.¹

Thus, most disabilities are not covered by ACC (Accident Compensation Corporation.)

Income protection insurance key points:

  • It replaces part of your income if you can’t work because you become ill or disabled.
  • It pays out until you can start working again – or until you retire, die, or you reach the end of the policy term – whichever is sooner.
  • There’s often a waiting period before the payments start – you generally set payments to start after your sick pay ends, or after any other insurance stops covering you. The longer you wait, the lower the monthly premiums.
  • You can claim as many times as you need to – while the policy lasts.

With income protection insurance, everything depends on getting the right policy – so it’s best to get advice from an independent financial adviser or broker.

Income protection insurance is not the same as critical illness insurance, which pays out a one-off lump sum if you have a specific serious illness, or life insurance, which pays out a one-off lump sum if you become terminally ill or die.

How does income protection work?

Income protection insurance pays you a monthly income protection benefit amount if you suffer a disability that affects your ability to work.
Having this type of cover means you can still meet your financial obligations — paying bills, covering household expenses etc — even while you’re unable to work.

Your Income protection insurance policy will spell out:

  • How much your premium will cost.
  • How the policy defines disability. Some policies will pay out a monthly benefit if an injury prevents you from working at your normal job but allows you to do other types of work that will nonetheless reduce your income.
  • How much you will receive as a monthly income protection benefit.
  • How long your benefit payments will last. The benefit period may be 2 or 5 years, or until age 65 or 70.

Top industries where people take out income protection

Income protection cover is available for everyone, but there are certain industries where it’s more popular. These include:

  • Self-Employed such as builders, plumbers and small business owners
  • Medical Professionals such as doctors, dentists & nurses
  • Qualified Professionals such as CEO, Accountant, Architects

Do I need Income Protection Insurance?

Sickness, injury or an accident are just a few of the things that can quickly and unexpectedly impact your income.

Loss of income is one of those things we dread to think about. Nevertheless the importance of taking care of your family and the financial commitments.


Are you eligible?

To get cover, you must be:

  • a citizen or permanent resident of New Zealand and currently residing in New Zealand
  • Work-visa holder
  • Aged between 2 and 70

How does Income Protection Insurance work?

Income protection insurance is a policy that protects you against loss of income due to sickness or accident. An optional policy add on is Redundancy cover

Income Protection Features & Benefits

Indexation Protection

To help protect you against inflation, Your monthly benefit will increase every year by the same percentage as the New Zealand Consumer Price Index (CPI). Your premiums will be adjusted accordingly with these increases.

Dedicated Claims Support

If you need to make a claim, you’ll be assigned a dedicated claims consultant who will support you throughout the claim process - to help make the claim as easy as possible. You'll be able to focus on what really matters to you, and we'll help take care of the rest.

Income Protection Insurance in New Zealand is flexible. Here are the most common features and benefits that you can choose from, when applying for cover:

How much income protection insurance get I get?

You can choose a monthly benefit up to a max 75% of your current pre-tax income or max $360.000 per annum.

What is Waiting Period?

Waiting period is the length of time between you becoming disabled and when you start receiving benefit payments.

Most income protection insurers in New Zealand offer a waiting period of 4, 8,13, 26 and 52 weeks. Some also offer 2 weeks waiting period and 104 weeks.

What is Benefit Period?

The Benefit Period is the length of time that your Income Protection monthly benefits will be paid to you and begins once the Waiting Period has expired.

You can choose a Benefit Period of 2 or 5 years or until age 65 or 70.

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Frequently Asked Questions

Income Protection (IP Cover) is a Life Insurance product which is designed to pay regular monthly payments for a specified period to replace max 75%  of your income when you can’t work due to a serious illness or injury.

Income Protection premiums are generally tax-deductible. 

The IRD allows you to claim the cost of income protection premiums, if the monthly benefit is taxable.

If you have a policy that includes another life insurance product, you may only claim a tax deduction for premiums paid for the Income Protection component.

Each policy defines how long you can be on a benefit. Usually 2 or 5 years, or until you are 65 or 70 years

You can apply for IP Cover by obtaining a quote online or by speaking to one of our registered financial advisors over the phone for personalised advice.