Part of our “Quick Insurance Q&A (NZ)” series answering common insurance questions for Kiwis.
What is income protection insurance?
Income protection replaces part of your income if you can’t work due to illness or injury.
In New Zealand, it typically covers:
- Up to ~75% of your income
- Paid monthly
- Until you return to work or reach a set period
Is it worth it?
For many people, yes – especially if your income is your biggest asset.
You’re statistically more likely to:
Be unable to work temporarily than to die early.
When income protection makes sense
It’s particularly useful if you:
- Rely on your income to pay bills
- Have a mortgage
- Are self-employed
- Don’t have large savings
When it might be less important
You may rely less on it if you:
- Have significant savings
- Have strong employer benefits
- Have a partner who can fully support the household
What about ACC in NZ?
ACC covers injuries, but not illness.
That means:
- Covered: accidents
- Not covered: cancer, illness, mental health conditions
Income protection fills that gap.
Common concerns
“Is it expensive?”
It depends on:
- Your age
- Occupation
- Health
- Waiting period
Longer wait times (e.g. 90 days) can reduce cost.
“Will it actually pay out?”
Policies vary.
This is where advice matters:
- Definitions of “unable to work” differ
- Some policies are more comprehensive than others
What’s the alternative?
Without income protection, your fallback is:
- Savings
- Partner’s income
- Government support (limited)
Bottom line
Income protection is worth it if:
Losing your income, even temporarily, would create significant financial stress.
If you’re not sure what this looks like for your situation, it’s usually worth having a quick chat. At Canvas Insurance, we help Kiwis make sense of their options and set things up in a way that actually fits. Get in touch with Kris directly if you want to talk it through with a broker.
