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28 Apr 2021

How would you cope if you suddenly lost your income?

Did you know that, every year, tens of thousands of New Zealanders find themselves unable to work because of an injury or illness? And one thing we’ve all learned in the past year is that life can be quite unpredictable, so it helps to have some protection in place. A case in point is income protection insurance – whether it’s something new to you, or something you’ve considered getting, here’s a handy guide to help you out.

What is income protection?

Income protection insurance is designed to support you financially if you’re unable to work for an extended period of time, due to an injury or illness. When applying for income protection, depending on your needs, you can choose:

  • The waiting period: This is the length of time you’ll need to wait, between the claimable event and the moment your insurer starts making regular repayment. Your ‘sweet spot’ depends on the size of your rainy-day fund, and how long your family can cope financially without your income.
  • The payment amount: Insurance providers generally allow you to replace up to 75 per cent of gross pre-incapacity income (note that tax obligations may also apply to any income protection claim payments).
  • The payment period: This is how long you’d like to receive your replacement income for when you are on claim. If you are on claim due to illness or injury, your payments will stop at the end of your benefit period, so it is important that you consider what is right for you.

How is income protection different from ACC?

Unlike the income protection ACC can provide, which is entirely accident-related, income protection insurance is designed to cover you if you’re off work due to a range of illnesses or injuries.

ACC pays up to 80 per cent of your gross pre-injury salary until you can return to work, while Income Protection pays up to 75 per cent, but as we’ve seen, you have more control over the payment period. Which brings us to the next point…

Do you need Income Protection?

If you have other people or significant financial commitments depending on your income (for example, a mortgage), relying on ACC alone for income protection may not be a good idea.

To understand whether you need this cover, here’s a key question to consider: How long would you be able to survive off your savings, if you lost your ability to earn an income for an extended period of time?

Income protection insurance may help keep you afloat and take some of the financial pressure off by supporting you financially until you get back on your feet.

Would you like to explore your options?

Get in touch. As insurance advisers, we can help you make an appropriate insurance decision based on your financial needs and situation. We understand that getting insurance can be an emotional decision, and we are with you every step of the way.


Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.

 Link Financial Group Ltd trading as Mortgage Link and Insurance Link FSP 696731 holds a licence issued by the Financial Markets Authority to provide financial advice. Insurance Link (NZ) FSP 446867 is authorised by that licence to provide financial advice. Please visit for more information and Disclosure information.