Income protection benefit periods

The benefit period sets the maximum time the insurer will keep paying for a single claim. Choose two years, and if you are still unable to work at the end of month twenty-four, the payments stop regardless of your condition. Choose to age 65, and they continue while you remain disabled up to that age.

The pricing reflects claim statistics rather than severity. Most disability claims resolve within two years, so a two-year benefit period buys most of the frequency at a fraction of the cost. What it does not buy is protection against the long-tail claim — the stroke at 48, the degenerative condition at 52, the mental health condition that does not resolve.

This is the point where insurance stops being about probability and starts being about consequence. A two-year claim is difficult. A twenty-year loss of income with a mortgage outstanding is a different category of event, and it is precisely the event insurance exists for.

If the premium for to-65 cover is uncomfortable, the fix is usually the waiting period rather than the benefit period. Lengthening the wait from four weeks to thirteen or twenty-six weeks removes the claims the insurer expects to pay most often, and that saving frequently funds the longer benefit period. You end up self-insuring the short, survivable claim and insuring the long, catastrophic one — which is the right way round.

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

• Whether the benefit period is stated in years or to an age, and what happens at expiry.
• Whether mental health, back conditions or chronic fatigue are subject to shorter limits.
• Whether the benefit period resets after a return to work, and how long you must work before it does.
• Whether related and unrelated conditions are treated as the same claim or separate claims.
• How the benefit period interacts with any TPD cover you hold.
• Whether cover continues if you are working overseas, and for how long.

Every New Zealand insurer writes income protection in new zealand 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.

• Sub-limits on mental health and musculoskeletal conditions vary between insurers and are among the most consequential differences in the market.
• Where a claim recurs after a return to work, insurers differ on whether a new waiting period applies — the recurrent disability provision is worth comparing.
• A to-65 benefit period can reduce the amount of TPD cover needed, which sometimes makes the combined package cheaper than it looks.
• An adviser can price a matrix of waiting and benefit periods so the trade-off is visible rather than guessed at.

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.