Income Protection in New Zealand
Income protection insurance pays you a regular monthly benefit if you cannot work because of illness or injury. It is designed to replace a portion of your salary — typically up to around 75% — so you can keep paying the mortgage and the bills while you recover.
What is income protection?
After a chosen “wait period” (for example four or 13 weeks), the policy pays a monthly amount until you can return to work, or until the end of the agreed benefit period or policy age. Importantly, ACC only covers accidents — not illness — so income protection fills a major gap for anyone who would struggle if a long illness kept them off work.
What it can cover
Who it’s for
- Employees and self-employed people who rely on their income to pay the bills
- Anyone with a mortgage, rent or dependants and limited savings
- Self-employed people with no sick leave and no employer cover
- Households where losing one income would cause real financial strain
What to think about
The wait period, benefit period and whether the policy is “agreed value” or “indemnity” all affect both the premium and what you actually receive at claim time. These details matter and are easy to get wrong on your own — an adviser will compare structures and insurers and tailor it to your income.
Agreed value vs indemnity
The two main income protection structures. Which is right depends on how stable your income is.
| Agreed value | Indemnity | |
|---|---|---|
| Benefit amount set | When you apply | At claim time, on recent income |
| Proof of income at claim | Not usually required | Required |
| Best suited to | Variable or self-employed income | Stable salaried income |
| Premium | Generally higher | Generally lower |
Frequently asked questions
How much of my income can I cover?
Doesn’t ACC already cover me?
What is a wait period?
Is income protection tax deductible?
Related cover
Ready to compare income protection?
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