Income Protection Insurance

Income Protection Cover protects you if your ability to earn an income is severely reduced or affected in any way. This is usually due to an illness, disease, or accident.

Income Protection will pay up to 75% of your income (though you can choose a lesser level if you want) should you need to make a claim.

When and for how long you get paid for is also up to you. You choose how long you will have to wait before you start receiving payments (a ‘wait’ or ‘stand-down’ period) and how long you will receive payments for (the ‘payment period’).

Should you need to make a claim, you will receive monthly payments (once your ‘wait’ or ‘stand-down’ period is over) until either you go back to work, or your ‘payment period’ is up – whichever is sooner.

As a bare minimum, we recommend taking out Mortgage Protection Insurance (a form of Income Protection Insurance) so your mortgage will be taken care of if you can’t earn an income.

For advice on your particular situation, we suggest you complete our online "Check" so we can give you a thorough break down of the costs involved.

There are some things you should be aware of before you take out Income Protection Insurance. We’ve broken these down for you below:

- Your Income Protection Insurance is based on your income. Usually this means your income over a consecutive 12 month period. If you haven’t earned income in the last consecutive 12 month period, it can be any consecutive 12 months over the last 3 years.

- Your claim payments won’t be more than the sum you have insured. For instance, if you have insured $60,000 of you income, but you income at the time of your claim was actually $75,000, you would still only receive payments based on your insured income ($60,000). That’s why it’s really important you inform us of any changes to your income so we can update your policy accordingly.

- Alternatively, you may only want to insure a smaller part of your income as that is what you feel would cover your needs (eg. You earn $80,000 but only want to cover $65,000 of your income as your family can manage on that) then you can, that’s totally up to you.

- Any payments received under your Income Protection policy are taxed. Just like regular income. The upside of this though, is that your premium payments for your income protection policy are tax deductible also.

Your policy protects your income, should you be unable to work due to health reasons. This may be because you have an illness, disease or have suffered an accident.

Income Protection Insurance will usually cover instances of depression as well.

Your policy won’t cover you if your injury or illness is self inflicted, or as a result of criminal activity.

Most plans will also not pay out if the reason you are off work is a result of a pregnancy, or a complication of a pregnancy that lasts fewer than 90 days.

We understand the unpredictable nature of being self employed.

If you have an irregular income (usually if you are self employed and/or a contractor) you can get an agreed level of Income Protection Cover.

Redundancy cover is not a standard feature of Income Protection Insurance, however, this extra protection can be added to most policies.

If it is something you would like to look into, contact your personal ClickCover adviser today, or any one of us at team@clickcover.co.nz

Basically, it’s cheaper.

By increasing your policy’s ‘stand down’ period your premiums reduce. This is because the longer your stand down period before your insurer needs to pay out, then the more likely you are to be able to return to work prior to a payment having to be made.

If you do opt to have a longer stand down period we would recommend that you think about having some sort of emergency fund or savings that can keep you going between the time you become unable to work and your policy payments starting.

If you need to make a claim you will receive up to 75% of the income you were earning prior to becoming ill or disabled.

There are several payment period options, and it’s totally up to you which one you think will work best.

The standard choices for a payment period are that payments will continue for 2 years, 5 years, until age 65 (retirement age) or until 70 years old.

If you are able to return to work prior to your payment period ending (no matter which payment period you have chosen) your income protection payments will cease.

However, if your disablement or illness that lead to the claim prevents you from returning to your chosen profession and your ability to work is now reduced, your income protection insurance will cover the difference for you.

For example, if you were once a plumber earning $85,000, and your disablement/illness now meant you were able to work in data input and your earnings were reduced as a result, your income protection policy will fill the gap.