Redundancy Insurance in NZ: Why Do You Need It?
Redundancy doesn’t knock — it just shows up.
And when it does, the financial pressure can hit fast. Even if you receive notice pay or support from Work and Income, that may not be enough to cover your mortgage, bills, or basic living costs.
That’s why more and more Kiwis are asking:
Should I get redundancy insurance in NZ?
This guide is built to answer exactly that. Whether you’re a full-time employee, the primary income earner, or simply planning, we’ll break down
✅ What redundancy insurance is — and what it isn’t
✅ How it compares to income protection insurance
✅ Who it’s best suited for in New Zealand
✅ What it typically covers and excludes
✅ How much does it cost (with real NZ examples)
✅ Who actually offers it in 2025
✅ How to choose the right policy for your financial needs
What is redundancy insurance in NZ?
Redundancy insurance — also known as unemployment cover — is a type of short-term income protection designed to provide financial relief if you’re involuntarily made redundant. That means your job has been eliminated by your employer for business reasons, such as restructuring, downsizing, or closure, not because of poor performance, misconduct, or resignation.
Unlike income protection insurance, which pays out due to illness or injury, redundancy insurance covers employment-related loss of income.
Why It Matters
Redundancy insurance gives you time and space to regroup financially, without immediately tapping into your savings or going into debt. It’s meant to act as a financial bridge between jobs.
It’s Designed to Help You:
● ✅ Cover essential costs like rent, power, groceries, and transport.
● ✅ Avoid relying solely on Work and Income (WINZ), which may be limited.
● ✅ Reduce financial stress and emotional pressure after job loss.
● ✅ Maintain a stable lifestyle while you search for new employment
Typical Features of Redundancy Insurance
Here’s what most New Zealand redundancy insurance policies include:
| Feature | Standard Range |
| Monthly Benefit | $2,000 – $6,000 (either a flat amount or % of income) |
| Benefit Duration | 3 to 6 months |
| Waiting Period | 30 days after redundancy is confirmed |
| Qualifying Period | You must hold the policy for at least 6 months before claiming |
| Covered Events | Only involuntary redundancy — not dismissal, quitting, or contract expiration |
🧠 Related Resource
Want to know how redundancy insurance compares to income protection?
👉 Scroll down to “Redundancy vs Income Protection” to see a full side-by-side breakdown.
Who Is Redundancy Insurance For?
Redundancy insurance is not for everyone, but it can be a game-changer for certain types of workers, especially those in financially vulnerable positions or industries prone to restructuring.
This type of cover is ideally suited to full-time employees who:
✅ Rely Heavily on Their Income
If your household relies primarily on your pay cheque, whether you’re single, partnered, or supporting dependents, losing that income suddenly can create immediate stress. Redundancy insurance replaces a portion of that lost income to give you time to recover and plan.
✅ Have Ongoing Fixed Expenses
If you have a mortgage, car loan, credit card repayments, or any regular financial obligations that can’t easily be paused, even a few missed payments can lead to debt spirals or credit score damage. Redundancy cover helps you stay on top of bills while between jobs.
✅ Work in Volatile or At-Risk Industries
Sectors such as media, tourism, technology, retail, and construction often experience frequent restructuring or economic downturns. If your industry is known for layoffs or contract shifts, insurance provides stability when the market doesn’t.
✅ Don’t Have a 3–6 Month Emergency Fund
Financial experts recommend having 3–6 months of savings, but most Kiwis don’t. If you’d struggle to replace your income from savings alone, redundancy insurance helps fill the gap without draining your bank account.
✅ Want Breathing Room After a Job Loss
Job hunting takes time and mental space. Redundancy cover allows you to search for the proper next role, rather than taking the first offer out of desperation.
🔥 Real Kiwi Example
John, 38, worked as a logistics coordinator for a large warehouse. When the company downsized, John lost his job with only two weeks’ notice.
Thankfully, he had redundancy insurance. His policy paid $3,500 per month for four months, covering his rent, utilities, and keeping his kids enrolled in school. The financial support gave him time to update his CV, upskill with a short course, and land a better-paying role two months later.
Note: If you’ve recently been made redundant or want to understand your rights under New Zealand employment law, start here:
👉 Read: Redundancy in NZ — What You’re Entitled To and How the Process Works
What’s Not Covered by Redundancy Insurance?
Redundancy insurance in NZ is designed for very specific scenarios, and it’s just as important to understand what isn’t covered as what is. If your job loss doesn’t meet the policy’s strict criteria, your claim will likely be declined.
You can only claim if you’re made involuntarily redundant due to a genuine business decision (like downsizing or closure) — not because of personal performance, contract terms, or choice.
🚫 Most Policies Do Not Cover:
Voluntary Resignation
If you choose to leave your job for personal reasons — even if it’s due to stress or a toxic environment — your redundancy policy will not pay out.
Dismissal for Misconduct or Performance
Being fired for poor performance, breaching company policy, or misconduct disqualifies you from claiming. Redundancy cover doesn’t apply to terminations that are your fault.
Self-Employment and Contractors
Freelancers, sole traders, gig workers, and contractors are usually excluded. Redundancy cover is designed for salaried, full-time employees with formal employment agreements.
🧠 If you’re self-employed, look into income protection policies that cover illness or injury instead. Learn more about income protection here.
Redundancy Within the Waiting Period
If you’re made redundant within the first 6 months of taking out the policy (known as the qualifying period), you won’t be eligible to claim. This clause prevents people from purchasing coverage after learning of potential layoffs.
Pro Tip:
Always check your policy’s Product Disclosure Statement (PDS) or speak to a licensed adviser. Some policies may also exclude specific industries or roles depending on the provider.
How Much Does Redundancy Insurance Cost?
The cost of redundancy insurance in NZ isn’t one-size-fits-all. Premiums vary depending on several personal and policy factors, including:
Key Factors That Affect Your Premium:
- Your age: Younger applicants typically pay less.
- Your income: Higher incomes = higher insured amounts = higher premiums.
- Your occupation: Jobs in industries with higher redundancy risk may cost more.
- Your selected benefit: The more income you want replaced, the higher the cost.
- Waiting period: A longer wait (e.g., 60 days vs 30) lowers the premium.
- Policy structure: Bundling with mortgage or income protection may reduce cost.
Typical Cost Guide (Per Month)
Here’s a snapshot of what you might expect based on income level:
| Annual Salary | Monthly Benefit | Estimated Premium |
| $60,000 | $3,000 | $25–$40 |
| $90,000 | $4,500 | $45–$65 |
| $120,000+ | $6,000 | $65–$90+ |
💡 Note: These estimates reflect 2025 pricing ranges in New Zealand from major insurers. Your actual quote may vary depending on your provider, health status, and any optional add-ons.
Tip to Reduce Your Premium
Want to lower the monthly cost of your redundancy cover? You can:
- ✅ Choose a lower monthly benefit (e.g., $2,500 instead of $4,000)
- ✅ Select a longer waiting period (60 days instead of 30)
- ✅ Bundle your cover with other policies (like income or mortgage protection)
- ✅ Work with a licensed adviser to find the most efficient structure
Not sure how redundancy cover compares to other types of income protection?
👉 See our full side-by-side comparison here
Redundancy Cover vs. Income Protection: What’s the Difference?
While redundancy insurance and income protection may sound similar, they serve very different purposes. Both are designed to replace income when you can’t work, but the reasons for the payout are what set them apart.
Understanding this distinction is essential so you can choose the right type of cover or combine both for complete protection.
Core Differences at a Glance
| Feature | Redundancy Insurance | Income Protection Insurance |
| Primary Trigger | Involuntary job loss (e.g. redundancy) | Illness, injury, or permanent disability |
| Eligibility | Full-time employees only | Employees and self-employed individuals |
| Benefit Duration | 3 to 6 months (short-term) | Months to years — up to age 65 or retirement |
| Claim Evidence | Proof of redundancy letter | Medical reports and certification |
| Availability in NZ | Add-on to mortgage/income cover | Available standalone or bundled |
Why People Confuse the Two
Both types of cover are designed to protect your income and provide monthly payments when you’re unable to earn. However, redundancy insurance is concerned with employment-based loss, whereas income protection addresses health-related incapacity.
Think of it this way:
- Redundancy cover steps in when your job is at risk of being cut.
- Income protection supports you if your health cuts your ability to work.
Should You Have Both?
For many New Zealanders — especially primary earners, mortgage holders, or families with dependents — having both policies offers broader protection.
That way, you’re covered whether you lose your job due to company downsizing or because of an injury or illness.
👉 Want to see what each policy looks like side by side?
Compare options now on CompareIncomeProtection.co.nz
Who Offers Redundancy Insurance in NZ?
Unlike life or health insurance, redundancy insurance is not widely available in New Zealand. In fact, as of 2025, only a few major insurance providers offer genuine redundancy cover, which is typically provided as an add-on, rather than a standalone policy.
Available Through These Providers:
🏦 First provider
- Offers redundancy cover as an optional add-on to mortgage protection or income protection policies
- Provides payouts of up to $3000/4000 a month, for a maximum of 6 months
- Policies are only available through licensed financial advisers, not direct-to-consumer
🛡️ Second provider
- Offers redundancy cover as an add-on to income protection
- Must be purchased via a licensed adviser — not available through their website or banks
- Often bundled with additional features like return-to-work support or wellness incentives.
To compare which one is better for you, visit Compare income protection
Why It’s Tricky to Find
Redundancy insurance in NZ is a high-risk proposition for insurers. As a result, most providers have withdrawn from offering standalone redundancy cover, particularly during volatile economic periods (e.g., post-COVID or during recessions)
That’s why it’s essential to work with a trusted adviser or use a comparison tool that specialises in niche policies.
Want to Compare the Options Side by Side?
Don’t waste hours searching insurer websites — we’ve done the legwork for you.
✅ See policy features, eligibility, and pricing at a glance.
✅ Get free quotes from licensed NZ advisers.
✅ No hard sells, no hidden fees
Visit Compare Income Protection
🏛️ Why Government Support Isn’t Enough
If you’re made redundant and don’t have insurance, you might qualify for Jobseeker Support from Work and Income NZ (WINZ). This benefit can provide short-term financial relief while you search for a new job, but it’s essential to understand its limitations.
What WINZ Jobseeker Support Provides:
| Category | Details (2025) |
| Weekly Payment (Single Adult) | Up to $353/week (before tax) |
| Means-Tested? | Yes — your savings, partner’s income, or other assets can reduce your payment. |
| Start Time | Payments may take 1–2 weeks to begin, depending on processing times |
Even at the full rate, Jobseeker Support provides less than half the average weekly wage in New Zealand. It may be enough to cover the basics, but for many, it’s not enough to maintain rent, debt repayments, or family costs.
The Reality Check
Government support is designed to help you survive, not thrive.
Redundancy insurance, on the other hand, is designed to:
✅ Maintain your lifestyle while between jobs
✅ Let you meet obligations like mortgage, power bills, or school fees
✅ Give you time to find the proper role, not just the first one
🧠 Think of Jobseeker Support as the safety net, and redundancy insurance as your backup parachute.
🔗 Related Resource
If you’re unsure how redundancy is handled legally in New Zealand or what your rights are under employment law:
👉 Read: Redundancy in NZ — What You’re Entitled To
How to Choose the Right Redundancy Insurance Policy
Redundancy insurance policies in New Zealand aren’t one-size-fits-all, and since they’re only offered by a small number of providers, it’s crucial to understand what features matter most before you sign up.
Here’s a breakdown of the most important factors to consider when comparing cover:
1. Are You Eligible?
Most policies are only available to full-time, salaried employees.
If you’re on a fixed-term contract, self-employed, or a contractor, you likely won’t qualify and should instead consider other forms of income protection.
Tip: Don’t assume you’re eligible — confirm it with the insurer or a licensed adviser.
2. What Is the Monthly Benefit — and How Long Will It Last?
Ask:
- How much will the policy pay out each month? (E.g., $3,000/month)
- Will it cover your essential expenses, such as rent, loans, food, or utilities?
- How long will it pay — 3 months or 6 months?
The longer the benefit duration and the higher the payout, the greater the peace of mind, but also the higher the premium.
3. What’s the Waiting Period?
Most policies have a 30-day waiting period after your redundancy is confirmed before benefits start.
Some allow more extended wait periods in exchange for lower premiums.
Make sure you can financially bridge the gap during the waiting period.
4. Is the Payout a Fixed Amount or Percentage of Income?
Some policies offer a fixed monthly amount (e.g., $3,000), while others calculate benefits as a percentage of your salary (e.g., 75% of your average income).
A fixed benefit might fall short if you earn a high salary, or be more than you need if you’re on a lower income. Choose based on your actual expenses, not just your gross income.
5. Is It Bundled With Other Covers?
Redundancy cover is not sold standalone in NZ — it must be added to a larger policy.
Check if it’s bundled with:
Bundling may offer better value and allow you to consolidate your cover.
6. Who Underwrites the Policy?
As of 2025, redundancy cover is only offered by a limited number of providers.
Knowing who underwrites your policy matters — not just for trust, but for understanding claim turnaround times, customer service quality, and policy exclusions.
7. Are There Extra Benefits?
Some redundancy policies come with added services such as:
- ✔️ CV review and coaching
- ✔️ Career transition support
- ✔️ Access to employment networks or job placement resources
These extras can add real value, especially during a stressful period of job searching.
🔍 Pro Tip: Use a licensed NZ adviser or a trusted comparison tool (like CompareIncomeProtection.co.nz) to filter and explain these variables side by side.
Bonus: Use a Trusted Comparison Tool
Comparing redundancy insurance policies isn’t as straightforward as it should be, especially in New Zealand, where few providers offer this type of cover and the fine print can vary significantly.
If you try to compare on your own, you’ll run into:
● Confusing exclusions and eligibility clauses
● No standardised benefit structures
● Limited direct access to redundancy policies (most are adviser-only)
● Outdated information on insurer websites
That’s why we created Compare Income Protection — a Kiwi-focused platform built specifically to take the guesswork out of finding cover that fits your income, goals, and risk tolerance.
Why Thousands of Kiwis Trust Us:
- Clear side-by-side comparisons — no PDFS, no fine print confusion
- Access to licensed NZ advisers — get expert help when you need it (with no pressure)
- No salesy tactics, no hidden fees — our goal is guidance, not gimmicks.
- Tailored to redundancy and income protection, we focus where others don’t
🗣️ Real User Feedback:
“I didn’t even know redundancy cover existed. CompareIncomeProtection made it easy to understand and helped me find a policy that worked with my mortgage too.”
— Real User
👉 Ready to see your options?
Compare Redundancy Insurance Now — it’s free, private, and takes just a few minutes.
FAQS: Redundancy Insurance in NZ
1. Can I obtain redundancy insurance after being made redundant?
No — you must already have a policy in place for at least 6 months before redundancy. It’s a proactive cover, not reactive.
2. Does redundancy insurance cover contractors or freelancers?
Most policies in NZ are for full-time, salaried employees only. Contractors, freelancers, or gig workers are typically excluded.
3. Will I still qualify if I resign due to stress or burnout?
No — voluntary resignation, regardless of the reason, is not covered. Redundancy insurance only applies to involuntary redundancy.
4. How long do redundancy insurance payments last?
Most policies in New Zealand pay out for 3 to 6 months, depending on your chosen plan and provider.
5. Can I bundle redundancy cover with other insurance?
Yes — redundancy insurance is usually an add-on to mortgage or income protection policies. Bundling can reduce premiums and expand your cover.
Final Thoughts: Is Redundancy Insurance Worth It?
If losing your job would put your lifestyle, family, or financial security at risk, then yes, redundancy insurance is more than worth considering.
It’s not just about the money. It’s about:
● Peace of mind during uncertain economic times
● Keeping your home, family, and lifestyle stable
● Giving yourself breathing room to find the right next job, not just the fastest one
Redundancy insurance is a buffer between you and panic, especially if you’re the primary earner or don’t have a 6-month emergency fund tucked away.
🔍 “The best time to protect your income isn’t after a layoff — it’s while you still have one.”
Ready to Take Control?
Whether you’re exploring your first policy or want to compare what you already have, you don’t have to go it alone.
Use our free, Kiwi-focused tool to compare providers, pricing, and features in minutes, with no hard sell and no commitment required.
Compare Redundancy Insurance Now
📘 Learn How Income Protection Works in NZ
Not sure what redundancy legally involves or what your employer must provide?
👉 Understand your legal rights and process in NZ
