Partial disability benefits

Disability is rarely binary. Someone recovering from major surgery, a stroke or a serious illness typically returns in stages — two days a week, then three, then full hours with reduced responsibility. The partial disability benefit is the provision that keeps money flowing during that period, and it does more work in practice than the total disability definition does.

The standard calculation is proportional. The insurer compares your pre-disability income with what you are earning now, expresses the shortfall as a fraction, and pays that fraction of your full monthly benefit. Earn 40% of your former income and you receive 60% of the benefit.

The provisions that vary are the entry conditions. Some policies require you to have been totally disabled for the whole waiting period before a partial claim can begin, which excludes anyone whose condition reduced their capacity gradually rather than stopping them outright. Others allow a partial claim from the start. For a self-employed person with a slowly worsening condition, that distinction can decide whether there is a claim at all.

1. 1The insurer establishes your pre-disability income under the policy’s definition.
2. 2It establishes your current earnings while working in a reduced capacity.
3. 3The proportion of income lost is calculated: pre-disability income less current income, divided by pre-disability income.
4. 4That proportion is applied to your full monthly benefit.
5. 5Offsets — ACC, other cover, some other payments — are applied to the result.
6. 6The benefit continues to be recalculated as your earnings change, until you return to full capacity or the benefit period ends.

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

• Whether a period of total disability is required before a partial claim can begin.
• Whether the test is loss of income, loss of hours, or inability to perform some duties.
• How pre-disability income is established for the partial calculation.
• Whether there is a minimum percentage of income loss before a partial benefit is payable.
• Whether the partial benefit period is shorter than the total disability benefit period.
• What rehabilitation, retraining or return-to-work benefits the policy includes.

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.

• Entry conditions for partial claims are one of the least standardised parts of income protection wordings.
• For people with gradually worsening conditions, a policy that pays partial benefits without prior total disability is materially better cover.
• An adviser can manage the conversation with the insurer before a graduated return to work, which avoids accidental termination of a claim.
• Rehabilitation and workplace modification benefits are often included and almost never claimed, because nobody knows they are there.

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.