Loss of earnings cover

Loss of earnings cover asks a simple question: how much less are you earning because of the disability? It then pays that shortfall, capped at the insured monthly benefit and at the policy’s percentage of income limit. That framing sounds like indemnity cover, and it is related, but the mechanics are more forgiving.

The difference is the reference period. A strict indemnity calculation typically looks at the twelve months immediately before disability, which punishes anyone whose income dipped in that window — including, awkwardly, someone who was already unwell. A loss of earnings policy usually allows a wider look-back, often the best twelve consecutive months out of the previous two or three years.

That matters most for the self-employed, for contractors, and for anyone paid substantially in commission. Income for those people is lumpy by nature, and being assessed on the wrong twelve months can halve a benefit for reasons that have nothing to do with the disability.

1. 1The insurer establishes your pre-disability earnings using the policy’s reference period.
2. 2It establishes your earnings during the period claimed, including anything you can still earn.
3. 3The difference between the two is your loss of earnings.
4. 4The benefit is the lower of that loss and your insured monthly benefit, subject to the percentage of income cap.
5. 5Offsets — ACC, other policies, some other payments — are then applied.

Because the structure is built around a loss rather than a fixed amount, partial claims fall out of it naturally. Someone who returns to work three days a week is earning 60% of what they used to and is losing 40%, and the policy pays against that loss without needing a separate partial disability formula.

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

• The exact reference period the policy uses, and whether it takes your best twelve months.
• How earnings are defined for your employment or business structure.
• Whether business expenses are deducted before earnings are calculated, and which expenses.
• How the policy treats income you continue to receive from a business you are not actively working in.
• What financial evidence you will be asked for at claim, and whether you can produce it.
• How offsets are applied — before or after the loss calculation, which changes the outcome.

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.

• Reference periods and earnings definitions differ substantially between insurers and are rarely visible in a quote comparison.
• For a company structure, an adviser can align the policy’s income definition with how you actually pay yourself.
• Where income is seasonal, the choice of look-back period can be the difference between a workable benefit and a token one.
• An adviser can check that the financial records you keep will actually satisfy the insurer’s claim requirements.

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.