Many insurance providers offer policies for many of your material assets like home, contents, and types of vehicles. While all of these are fairly important, these assets may also be at risk in the event that you lost your source of income.
In order to pay for these expenses (and other costs at home), it’s important that you keep your job. But what happens when your ability to earn is compromised due to injury or illness?
Income protection insurance is arguably one of the most important, albeit unpopular insurance policies to get, especially when faced with financial dilemmas. Each policy varies based on the features, benefits, and criteria laid out by providers. Certain factors like budget, lifestyle, and circumstances need to be considered as well.
So before you decide on your income protection plan, you should ask yourself the following:
If you're the breadwinner, and/or you just want a more secure cushion in the event that you won't be able to provide for your family for a while, it's best to consider getting a payment protection insurance.
Factors include the type of coverage, wait period, and benefits of your chosen policy.
You can choose a cover that insures you against accidents, diseases, and injuries, which prevents you from working and earning an income.
Wait period is the time between the approval of your claim and the date of its effectivity. After such a period, you will be receiving monthly payouts which could be after 30, 60, or 90 days from the effective date.
There are several types of income insurance in NZ, and the coverage differs depending on your current circumstances.
Here are some of the best income protection insurance you can apply for in NZ:
ANZ’s income protection or their living expenses cover insures you against accident or illness, which could compromised your ability to earn. ANZ provides up to $4,000 payout per month for up to 24 months or 2 years. You can choose the amount you can cover, based on how much you’re earning.
With ANZ, you can add redundancy insurance that covers your living expenses if you’re unemployed. This is a form of protection that can be used for mortgage or loan repayments. They can pay you an additional $4,000 each month for up to 180 days as per the agreement.
Aside from ASB’s life and loan insurance policies, they also offer their Lifestyle Security Plan that includes insurance benefits for different types of situations. Among these benefits is ASB’s income protection cover that provides you monthly benefit payments in case of unemployment due to injury or severe sickness.
You can also apply for redundancy cover, as its monthly sums can be used to pay for other living expenses like bills, mortgage, and many more.
If you think you need additional coverage for specific situations, you can bundle your income protection with the following:
Partners Life Insurance offers income and life income policies that provide monthly compensation if you get injured, sick, or pass on due to old age or accident. This income insurance covers you for a specific term or until your retirement.
As they offer a tailored income policy, they advise that you talk to their financial agent with free consultation instead of getting an online quotation. This way, you can be guided about the right insurance policy for your situation.
Given that you need to request a financial adviser, their policies are more expensive than other income insurance providers. But rest assured that you will get the most suited policy for your needs.
Fidelity Life supports those who are having a hard time earning money Their income policy is designed to give you all the essentials and extra benefits you need with inclusions like rehab, hospitalisation, and disability benefit. They also offer coverage for injury, death, and other individual circumstances.
It’s up to you how much you’re willing to pay monthly, which can go up to $30,000 each month. They also offer flexible payment options where you can choose to pay monthly, fortnightly, yearly, semi-yearly, and quarterly.
Upon your application, you can add benefits based on what you currently need, which includes the following:
Pinnacle Life has an online application process where you can get a 10% discount on your first policy year. You can also apply for a joint policy discount that entitles you for a 7% discount, and get as many discounts based on your health and lifestyle.
As Pinnacle’s insurance application is made online, they also extend its offers to Kiwis who are in Australia, US, UK, Canada, Ireland, Singapore, or Hong Kong.
You can be qualified for an income protection tax deduction depending on your chosen provider. This can be categorised under “loss of earnings” where you can claim the cost of income protection if the payout is taxable. Ask your insurer if income protection is deductible that can be claimed as an expense while unemployed.
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