This type of insurance helps to support you through a monthly payout (a percentage of your income) when your illness or injury prevents you from receiving income from work. This cover is offered either for a short period (2 or 5 years) or a longer period (until 60 years old).
For most of us, our ability to earn an income is the most important thing as it provides for not only our own living expenses, but also for our family and loved ones. If you are unable to return to work due to an illness or injury tomorrow, will you have enough money in your bank account to maintain your standard of living or live the life you want to?
Even with the basic benefits provided by the government, it can be hard to continue living the same life as you used to or work towards the future lifestyle you planned. We think you should seriously consider Income Protection Insurance to provide for you financially, in the event you cannot work for an extended period of time. It will give you enough income and time to plan in response to unexpected changes in your career, and readjust for your future.
First, check out an insurance company that provides Income Protection Insurance or speak to an insurance adviser. Cigna, Partners Life, AIA are some of the larger brands that offer this cover. A number of banks will also offer a version of this cover, along with other smaller specialised providers.
Second, you can get a quote online or with an adviser to understand how much cover you should think about getting. This is quick and easy, so take some time and compare quotes from different providers and choose the best one for you. Pay only for what you need.
Third, complete an application form and have your personal medical history, as well as your family’s ready. Insurers will need to take some time to assess your medical history to understand risks and what can and can't be covered under your policy. You will also need to provide proof of income and financial history, such as recent pay slips and tax returns/IRD correspondence, so that you and your insurer can set an agreed value.
Fourth, check that you have an Enduring Power of Attorney who has the legal rights to make decisions on your finances, health and welfare on your behalf for when you are seriously ill and cannot receive any income.
Lastly, check that your insurance cover is still right for you every 12 months or if you have any changes to your income or lifestyle. It can be easy to set and forget but it is worthwhile to adjust your policy as your career changes and progresses.
Quashed is an online platform that makes it easy for you to manage and track all your insurance in one place. You’ll be prompted at the right time to check on your insurance and it helps you keep track of how your premiums are increasing each year.
The cost of your premium is different with each provider and they don't all follow the same guidelines when it comes to calculating costs. Premiums are the on-going payments you make to continue your cover and protection. Below are some of the common factors used in the industry that will play a part in determining your premium.
Your smoking history: Your health and the risk of illnesses are important when it comes to making future claims. You will have to pay higher premiums for Income Protection Insurance if you have a history of smoking, particularly in the last 12 months.
Your occupation/profession: Your daily lifestyle and work environment can play a significant part in determining your premium. If you are working at a high risk environment such as the trades or around heavy equipment, you will pay more compared to office jobs. This also extends to professionals whose work requires perfect health, such as jewellers or medical professionals. The more you are at risk of illnesses and injury the higher your premium will be.
Your income: Premium costs will change based on different income levels, so the higher your income, the higher your premium will be.
Your age: The older you are, the easier for you to get illnesses and more likely to make a claim and so your premium will increase. Some factors such as your income level is also taken into consideration with the risk associated with your job in determining your premium.
Your plan and cover: Depending on the policy you choose, costs will be different based on factors such as benefit period and pay out amount. The more benefits and cover you're after, the more you will have to pay.