What income protection costs

Income protection is the cover most people should own and the one they find hardest to price, because the premium depends on more variables than any other product in the suite. Two people the same age, on the same income, can pay very different premiums because of what they do for a living and how they have set the policy up.

We do not publish an income protection premium table, for the same reason we do not publish one for trauma: there is no reliable, current New Zealand source we would be willing to quote. What we can do is explain what moves the number, so that when a quote arrives you can see why it says what it says.

The starting point to hold in your head: for a given person, income protection generally costs more than life cover. That is not an insurer being greedy. It is that the probability of being unable to work for six months before you turn 65 is far higher than the probability of dying before 65.

The lever most people should pull first

If the premium is too high, extend the waiting period before you cut anything else. Most households can absorb thirteen weeks with some combination of leave, savings and a partner’s income. Very few can absorb the end of a career. Cutting the benefit period from age 65 down to two years saves money in the same way that cancelling the policy saves money.

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

• Which occupation class the insurer has put you in, and whether it is the right one for what you actually do.
• Whether the benefit is calculated on income before or after business expenses, if you are self-employed.
• Whether the policy offsets ACC, sick leave or other insurance against the benefit.
• Whether there is a partial disability benefit for a phased return to work.
• Whether the premium is stepped or level — income protection stepped premiums rise steeply with age.
• Whether the benefit indexes while you are on claim, which matters on a long claim.

Every New Zealand insurer writes what life insurance costs in nz 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.

• Occupation classification is not standard across insurers, and being reclassified one step can change the premium noticeably.
• Offset clauses differ substantially and are invisible on a price comparison.
• For the self-employed, matching the policy against ACC CoverPlus Extra avoids paying twice for accident risk.
• Agreed value availability has narrowed in New Zealand, so knowing who still writes it matters.
• An adviser can model several waiting and benefit periods at once so you can see the actual trade-off.

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.