How much income protection insurance do I need?

Do I need income protection insurance?

The easiest way to work out if you need income protection insurance is to ask yourself: If I become sick or injured and can’t earn an income, could I still pay my bills during a long recovery?

According to the Manatū Hauora (Ministry of Health), most Kiwi adults (86.2% of the 6,977 adults surveyed) rate their health as pretty decent.¹But here’s something to ponder – according to the Financial Resilience Index 2022, of the 2,000 respondents, most employed New Zealanders have less than six months’ worth of expenses saved.² The OneChoice Kiwi Concerns Report 2023 also found that 62% of Kiwis (from 1,000 respondents) are extremely or very concerned about living from paycheque to paycheque. It also found that two-thirds are very worried about not being able to cover emergencies or unexpected costs.

If your livelihood hinges on a steady income – whether you’re on the payroll, hustling as a sole trader, freelancing, or running your own business, it’s a smart move to consider income protection insurance.

When you’re young, kicking goals in your career and personal life, it’s easy to think you’re bulletproof. Or maybe you’re at a point where you’re building a nest egg with your partner, and you reckon you can handle the financial curveballs. No matter your walk of life, your income is your ticket to the good life you’ve chosen. But the thing is – we can’t predict what tomorrow will bring. Having income protection insurance can help to protect your income and the life it affords you.

What is income protection insurance?

Income protection insurance is a type of insurance that working age New Zealand residents can receive, if they are working a certain number of hours a week.

With OneChoice Income Protection Insurance, if you are between 16 – 60 and work 15 hours or more a week, you can apply to cover up to 75% of your income, up to $15,000 per month.

Your monthly benefits can help you take care of essential expenses like groceries, utilities, and the mortgage or rent, while you recover from your sickness or injury.

Read more about what is income protection insurance.

When can income protection insurance come in handy?

Income protection can let you enjoy the peace of mind that comes with knowing that you’ve protected your income if you’re:

unable to perform the usual duties of your regular occupation necessary to produce income; and
are under the regular care of, and following the advice and treatment of a medical practitioner in relation to the disabling sickness or injury, for which you are claiming; and
are suffering a loss of income; and
are not engaged in your regular occupation or any other gainful occupation.

With OneChoice Income Protection Insurance we pay your income benefit monthly in advance, starting from the end of your waiting period. Sweet as!

What does income protection insurance cover?

Income protection insurance usually covers sickness and injuries that prevent you from performing your duties as part of your occupation, which results in a loss of income.

Generally, you can be covered for sicknesses that cause you to be unable to work for an extended period, for example cancer, heart attack, mental illness, epilepsy, Parkinson’s disease, arthritis, rheumatoid arthritis, and chronic obstructive pulmonary disease.

You can also be covered for injuries like nerve damage, brain injury, loss of vision, loss of hearing, a broken arm or leg, amputation, burns, or back injury. Income protection helps replace lost income when you’re unable to work because of a sickness or injury. A waiting period and benefit period applies to the cover.

The New Zealand Government’s Accident Compensation Corporation (ACC) primarily covers specified accidental injuries and some specific sickness.³

Every income protection insurance product is different, so it’s important to read the policy document to ensure it meets your individual needs. If you have any questions about OneChoice Income Protection Insurance, then feel free to ask our friendly team, or get them to give you a call back to chat.

How much income protection cover will I need?

Everyone’s individual situation is different. Anyone who is employed, either full-time or part-time should consider whether income protection insurance would assist to help cover bills and everyday expenses if they were unable to work due to sickness or injury.

It's worth creating a budget to analyse how your total expenses stack up against your income. Factors such as sick leave entitlements, monthly earnings, and family obligations are important to consider in your decision.

Evaluate your cover needs

As a guide, the first step to working out how much insurance you may want to apply for is figuring out how much income you earn on a regular basis. This would include your wages or salary, which would not include passive income such dividends or interest from investments.

Assess your expenses

As a next step, you can look at your expenses and financial obligations and for how long you would be able to continue to make them without an income. The frequency of payment may vary for these as some expenses are paid weekly, while other costs are either fortnightly or monthly. Look at your bank statement for the past year to work out an accurate estimate of each time for your budget.

Weekly costs can include:

Groceries
Rent
Petrol or public transport
School fees
Entertainment

Monthly costs can include:

Mortgage
Electricity/Gas
Internet
Phone
Insurance
Hire purchases
Personal loans
Store and credit card payments

Yearly costs can include:

Property rates
Water rates
Vehicle registration and repairs
Home maintenance
Holidays
Medical bills
Pet bills
Clothing and shoes
Household goods

Protect your income because the bills don’t stop if you can’t work!

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What you get with OneChoice Income Protection Insurance:

Working New Zealand residents aged 16 – 60 can apply

Whether you’re a rookie to the workforce or a seasoned pro, with OneChoice you can be confident that your lifestyle will be protected. Once your income protection insurance is in place, it will remain active for the term of your policy, so long as you continue to pay your premiums.

Cover for both employees and the self-employed

It doesn’t matter if you’re a sole trader, self-employed or are an employee – you can cover up to 75% of your monthly pre-tax income, up to $15,000 per month. You can use the monthly payments however you like, such as to pay bills and living expenses if a sickness or an injury prevents you from working.

Apply in just one phone call

Just answer a few questions about your work, health, and lifestyle over the phone – no medical or blood tests needed to apply. That's all it takes to get started with protection that looks out for you (and your income). Piece of cake!

Premiums can be tax deductible

Not only can income protection safeguard your income, but it may also offer a financial win at tax time – sweet as! When tax time rolls around, consider chatting with a tax professional to see if your premiums qualify for a deduction.⁴

Recurrent disability benefit

If you have to make another claim within 6 months of your last claim because your sickness has returned in that time, it’ll be counted as a continuation of the first claim. This means you won’t have to go through another waiting period before you’re paid a benefit. Good as gold!

Rehabilitation benefit

As well as a monthly benefit payment, you can receive an additional reimbursement of up to 50% of your income benefit each month, to a maximum of $3,000, for up to 6 months if you actively participate in a rehabilitation program. Alternatively, you have the option to be reimbursed 6 times the income benefit to support your efforts to return to work.

Choose your waiting period

You can apply for a waiting period of 30 or 90 days – it's up to you! This is the time you’ll have to wait before your income benefit payments are payable.

Flexible benefit period

You can apply for a benefit period of 6 months, 1 year, 2 years, or 5 years. This is the maximum period you can receive your monthly benefits for, if you’re unable to work. Easy as!

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