How an income protection claim works

Income protection replaces a proportion of your earnings while you are unable to work through illness or injury. Because the payment continues over time rather than settling once, the claims process is structured differently from a life or trauma claim: there is an initial assessment, then an ongoing one.

Two tests run in parallel throughout. The medical test asks whether you meet the policy’s definition of disability — usually an inability to perform the important duties of your own occupation, though the wording varies and matters enormously. The financial test asks what you were earning before, and what you are earning now, because the benefit is calculated from the difference on an indemnity policy.

The first practical point is to notify early. The waiting period usually runs from the date you became unable to work, not from the date you told the insurer, but late notification delays everything downstream and some policies impose their own notification requirements.

1. 1

   Notify as soon as you stop work

   Do not wait until the waiting period has passed. Tell the insurer or your adviser immediately so the file is open and the evidence gathering can start.

2. 2

   Initial claim forms

   Three parts, typically: your statement, your doctor’s medical certificate, and where you are an employee, an employer’s statement confirming your role, income and last day worked.

3. 3

   Financial evidence

   On an indemnity or loss-of-earnings policy, the insurer verifies pre-disability earnings — payslips, IR statements, or for the self-employed, financial statements and tax returns. On an agreed value policy the income was verified at application instead.

4. 4

   The waiting period

   No benefit accrues until it has elapsed. Waiting periods are commonly measured in weeks or months, and the longer the waiting period the lower the premium.

5. 5

   First payment

   Usually monthly in arrears, so the first money typically arrives a month after the waiting period ends. Budget for that gap — it is the point where households get caught out.

6. 6

   Ongoing review

   Periodic medical certificates, updated financial information, and sometimes an independent medical examination or a rehabilitation discussion. The frequency reflects the nature of the condition.

7. 7

   Return to work

   Full recovery ends the claim. A partial return usually moves you onto the partial disability benefit, which pays a proportion reflecting the income you have lost rather than stopping outright.

Insurers are also generally entitled to require reasonable evidence throughout the claim, and to ask you to participate in rehabilitation. That is not hostility; a well-run income protection claim involves the insurer actively helping you get back to work, because that outcome suits both of you.

These are the details that decide whether the cover does what you expected. Read them before you compare on price.

• Whether your policy is agreed value, indemnity or loss of earnings — it changes what you have to prove and when.
• Whether the definition of disability refers to your own occupation, any occupation, or a hybrid.
• The waiting period, and whether it restarts if you return to work briefly and then relapse.
• The benefit period — two years, five years, or to age 65 — which decides how long the claim can run.
• Which other income is offset, especially ACC weekly compensation.
• Whether the policy has a partial disability benefit and how it is calculated.
• Whether the premium is waived while you are on claim.

Every New Zealand insurer writes how life insurance claims work to its own wording, and the words are where the money is. Two policies that look identical on price can pay very differently when it matters. Closing that gap is the entire job of an adviser.

• An adviser can tell you at the outset whether your policy responds to the situation, before you spend weeks assembling evidence.
• For the self-employed they know what financial evidence the insurer will accept, which is where most delays occur.
• They can co-ordinate an income protection claim with an ACC claim so that offsets are handled correctly rather than clawed back later.
• They manage the ongoing review requirements so the claim does not stop because a certificate was late.
• At the point of a graduated return to work, they can make sure the partial benefit is calculated properly.

There are three ways to buy life cover in New Zealand, and they are not equivalent. You can buy direct from one insurer, which means you see one product range and one underwriting appetite. You can buy through your bank, which usually means a single insurer’s product sold under the bank’s brand, often with narrower definitions. Or you can go through an adviser, who quotes several insurers at once and is required to put your interests first.

The premium you pay is the same either way. Insurers build adviser commission into their pricing whether or not an adviser is involved, so going direct does not get you a discount — it just removes the person whose job is to argue your corner at application and at claim time.

• An adviser can see which insurer is currently taking your health history on standard terms, and which one will load or exclude it.
• An adviser can structure cover across two insurers if that produces a better outcome than putting everything with one.
• An adviser handles the underwriting back-and-forth, and is the person who chases the claim when a family is least able to.
• An adviser has to document why the recommendation suits you, which is a written record you can hold them to.

We are a referral service, not an insurer. We do not quote premiums and we do not sell policies. What we do is put you in front of one licensed New Zealand adviser who can compare the market properly.

1. 1

   You tell us what you are looking at

   The form takes about a minute. Nobody asks for your medical history on a web form — that conversation happens with the adviser, properly, and only once you have decided to proceed.

2. 2

   An adviser calls you

   A licensed New Zealand adviser talks through your situation: who depends on you, what you owe, what you already have in place, and what you are actually worried about.

3. 3

   They compare the market

   The adviser quotes across the major insurers, checks which of them will take your health history on the best terms, and puts the options side by side in writing.

4. 4

   You decide, in your own time

   There is no obligation and no cost to you. If the answer is that you already have enough cover, a good adviser will tell you that.