A mental-health condition can interrupt your income just as seriously as a physical illness. In New Zealand, income protection for mental health may help replace part of your earnings if you’re medically unable to work because of depression, anxiety or another eligible condition. But not every policy responds in the same way. Understanding exclusions, waiting periods and claim requirements helps you compare cover that fits your life, rather than simply choosing the cheapest premium.

Key Takeaways: What New Zealanders Should Know

  •       Cover is possible: Income protection for mental health may pay a monthly benefit when an eligible condition prevents you from working. A diagnosis alone does not guarantee a claim.
  •       Conditions differ: Depression and anxiety may qualify; stress or burnout require careful assessment against the policy’s disability definition.
  •       ACC is different: Ordinary illness and gradual workplace stress generally fall outside ACC, although some qualifying mental injuries are covered. See ACC’s official cover rules.
  •       History matters: Previous treatment, medication or counselling can influence underwriting, exclusions or premiums.
  •       Compare the fine print: Check exclusions, benefit limits, waiting periods and how reduced working hours are treated.
  •       Know your rights: The Financial Markets Authority’s insurance guidance explains fair treatment and complaints.
  •       Check tax treatment: Inland Revenue’s income protection guidance explains when premiums may be deductible.

Does Income Protection for Mental Health Cover Depression and Anxiety?

Yes, it can. Some NZ income protection policies cover mental-health conditions that stop you from performing your work duties. Whether a particular claim succeeds depends on the disability definition, your medical evidence, exclusions and any applicable waiting period.

Depression and anxiety claims

Someone experiencing severe depression might be unable to concentrate, maintain attendance or complete essential tasks. Another person with an anxiety disorder might be unable to perform key duties despite receiving treatment. These circumstances may be relevant to an income protection assessment, but the insurer will consider the actual effect on work capacity, not just the condition’s name.

PTSD and other conditions

Post-traumatic stress disorder and other diagnosed mental-health conditions may also be considered. Check whether the policy contains an individual exclusion or a broader mental-health limitation.

If mental-health cover is a priority, compare now to explore policy features alongside price.

Can You Claim for Stress Leave or Burnout?

Taking leave for stress does not automatically trigger an insurance payment. A claim usually requires evidence that a medical condition meets the policy’s definition of disability.

Burnout can involve exhaustion, poor concentration and difficulty working, but the label itself may not meet claim requirements. A treating professional’s assessment, any related diagnosis and the impact on your occupation can all matter.

If you can return on reduced hours, ask whether the policy provides partial disability benefits. Some policies may pay a reduced benefit when you are medically able to work part-time but have lost eligible income.

Understanding Mental-Health Exclusions and Limits

When choosing income protection for mental health, look closely at what the policy does not cover. Two offers with similar premiums can provide different levels of protection.

Individual exclusions

An exclusion might apply to a specified condition or a wider group of related symptoms. Read the wording carefully. For example, an exclusion referring broadly to psychological conditions may be more restrictive than one referring to a particular diagnosis.

Benefit limitations

A limitation is not necessarily a complete exclusion. Some policies may restrict how long a mental-health claim can be paid, even when the general benefit period is longer. Others may offer an optional restriction in exchange for a lower premium.

Ask whether any limit applies per claim or across the policy’s lifetime. Also check whether restrictions can be reviewed later; removal is never guaranteed.

A low premium is less useful if it leaves a gap you cannot afford. To weigh up cost against the protection offered, compare now before settling on a policy.

Can You Get Cover With a Previous Mental-Health Condition?

A history of depression, anxiety or counselling does not automatically prevent you from applying. Insurers assess applications individually, considering factors such as symptoms, treatment, time since recovery and previous time off work.

An application could be accepted at standard rates, offered with an exclusion or higher premium, postponed, or declined. Outcomes depend on the circumstances and underwriting rules.

What should you disclose?

Answer every health question accurately, including questions about medication, counselling and past symptoms. Do not assume an old condition is irrelevant. If you cannot remember dates, check your records or ask for clarification rather than guessing.

For more detail, read our guide to income protection with pre-existing conditions.

ACC vs Private Cover for Mental-Health Claims

ACC and private income protection have different purposes. ACC does not generally cover depression, anxiety or gradual workplace stress simply because they prevent someone from working. It may cover a diagnosed mental injury when it results from a covered physical injury, a criminal act listed in Schedule 3 of the Crimes Act 1961, including sexual abuse or assault, or a qualifying traumatic event at work.

Private cover may respond to illnesses outside ACC’s scope, provided the policy conditions are met. It may also contain offset provisions, which can reduce an insurance payment when other compensation is received.

Situation                                                                                            ACC                                               Private income protection                                
Depression unrelated to a qualifying injury Generally not covered Potentially covered
Gradual workplace stress Generally not covered Depends on medical evidence and wording
Mental injury after a qualifying traumatic work event May be covered Depends on policy
Mental injury caused by a covered physical injury May be covered Depends on policy and offsets

These are general comparisons, not promises of claim acceptance.

How Much Could a Mental-Health Claim Pay?

The monthly benefit depends on the amount insured, the policy’s payment rules and your financial circumstances. For illustration, if a hypothetical policy provided 60% of a $6,000 monthly income, the starting figure would be $3,600 before any tax treatment, offsets or other adjustments. This is an example, not a standard payment rate.

Waiting and benefit periods

The waiting period is the time you must satisfy the policy’s conditions before eligible payments begin. A longer wait may reduce premiums, but it also means relying on savings, sick leave or household income for longer.

The benefit period sets how long eligible payments may continue, subject to policy terms and ongoing claim requirements. Check for any shorter mental-health-specific limit.

Tax treatment also matters. Whether premiums are deductible and payments taxable depends on the policy structure. Confirm the position for your cover rather than assuming every policy works alike.

If you’re balancing affordability against the length of support you might need, compare now with your waiting period and benefit period in mind.

How to Compare Policies for Mental-Health Cover

Comparing income protection for mental health should start with policy wording, not a price ranking. The most suitable option is the one that addresses your risks at a cost you can maintain.

Feature                                                 What to check                                                                                                                
Mental-health cover Which conditions may qualify under the disability definition?
Exclusions Are psychological conditions or existing diagnoses excluded?
Special limits Is there a shorter maximum payment period for mental-health claims?
Waiting period How many weeks or months could you manage without payments?
Benefit period How long could support continue for an eligible claim?
Partial disability Is support available during a gradual return to work?
Premiums Are current and possible future costs affordable?

A salaried employee with paid sick leave might prefer a different waiting period from a sole trader with irregular cash flow. The right waiting period depends on how long you could realistically cover your expenses without benefit payments.

Make the comparison about value and suitability, not just the cheapest quote. If you’re ready to explore the trade-offs, compare now.

How to Make a Mental-Health Income Protection Claim

  1. Check your policy. Read the disability definition, exclusions, waiting period and required forms.
  2. Talk with your treating professional. Discuss how your condition affects specific work duties and what supporting medical information is appropriate.
  3. Gather documents. You may need income records, employment information, medical reports and evidence of time away from work.
  4. Submit and follow up. Respond to reasonable requests for further information, and keep copies of correspondence.
  5. Review changes in capacity. Tell the insurer about a planned return to work or changed hours and ask how the policy treats partial disability.

What if your claim is declined?

Request the decision and reasons in writing. Compare the explanation with your policy and check whether further evidence could address the issue. You can use the insurer’s complaints process and, if unresolved, its independent dispute resolution scheme.

Our article on why income protection claims are denied explains common problems worth checking.

Choosing Cover That Fits Your Working Life

For an employee, the key questions may be how long sick leave will last and whether monthly benefits could help with rent, a mortgage or family expenses.

For self-employed New Zealanders, income evidence, business fluctuations and the absence of paid sick leave may be especially important. Look carefully at how the policy measures earnings and assesses an inability to work.

If you already have cover, review it before replacing it. New health information could affect the terms of a replacement policy, so do not cancel existing protection until you understand and have confirmed the new arrangements.

Final Thoughts: Compare the Cover, Not Just the Cost

For anyone considering income protection for mental health, a suitable policy is one whose exclusions, claim definitions and payment periods make sense for their circumstances. You cannot judge that from the monthly premium alone.

Compare Income Protection helps New Zealanders compare income protection options and consider features relevant to their situation. When you want to look beyond the headline price, compare now and focus on the protection you would actually receive. compare now

Frequently Asked Questions

Q: Does income protection for mental health pay for anxiety and depression?

A: It can, where the condition meets the policy’s disability definition and there is no relevant exclusion or restriction. Medical evidence and work capacity are central to the decision.

Q: Does income protection cover stress leave in NZ?

A: Not automatically. Being signed off work or taking leave does not by itself prove eligibility. The claim must meet the policy’s requirements.

Q: Can I get cover if I’ve had depression before?

A: Possibly. Past depression may affect underwriting, exclusions or pricing, but it does not necessarily prevent an application.

Q: Do I have to disclose counselling?

A: Answer the application questions fully and accurately. If counselling falls within what is asked, disclose it, even without a formal diagnosis.

Q: How long can a mental-health claim last?

A: It depends on the selected benefit period, any mental-health-specific limitations and whether the claimant continues to meet the policy’s requirements.

Q: Can I receive payments while returning part-time?

A: Some policies include partial disability benefits. Check eligibility, income reduction rules and how the insurer calculates payments.

Q: Does ACC cover mental-health conditions?

A: ACC may cover certain qualifying mental injuries, but general illness and gradual workplace stress are not ordinarily covered.

Q: What if a mental-health exclusion is on my policy?

A: Read its exact wording and ask whether a future review is available. An exclusion does not necessarily prevent claims for unrelated conditions.