Income protection premiums are calculated using a range of variables. What variables you select on your policy, as well as your age and occupation can affect the cost of your cover. Below are the main options that will affect the price you pay.

1. The waiting period

The waiting period on your premium is essentially the amount of time that you will have to wait before you will be paid any income replacement benefit should you go on claim. Generally, most insurers offer a four, eight or thirteen-week wait – the longer you wait, the cheaper your premium. In some cases, such as if you have reliable emergency savings, a longer wait period might suit you best. It all depends on how well you could cope financially before payments kick in.

2. The benefit period

A benefit period is the amount of time you would be paid your income protection benefit for. The benefit period can range anywhere from two or five years, or even to the age of 70 and the longer the benefit period, the higher the premium. According to statistics, most people who are unable to work due to an illness or accident will be able to return to work within two years. However, should you be unlucky enough to suffer a serious illness or accident which leaves you unable to ever return to work, do you have a backup plan? 

 

3. CPI Indexation

Most insurers allow you to select CPI indexation which means that your level of cover will increase every year by the same amount as the New Zealand Consumer Price Index. Selecting this option helps your sum assured to stay in line with inflation. However, this is optional and if you are looking at ways to reduce your income protection premiums this may be a variable you wish to reconsider. However, we recommend speaking with an adviser to ensure your plan is going to be suitable for you in the long term. 

4. Mental Health Limitation

Some insurers give you the option to exclude any claims for being unable to work due to mental health or limiting your benefit period for any claims related to mental health, thereby reducing the cost of your cover. Before considering the removal of this option to reduce your premiums, it is important to weigh up your risks and speak with an adviser.

5. Reduce your level of cover

Whilst not ideal, if you are serious about reducing your premiums you can opt to reduce your level of cover. If you do feel that reducing your level of cover is your only option, you may wish to consider increasing other types of cover, such as trauma cover. Trauma cover is ideal in that you would have cash on hand to deal with a serious health condition. However, the number of conditions covered under trauma cover is limited, whereas income protection provides cover for any injury or illness that causes you to be off work for longer than your selected wait period and that, of course, meets the definition of disability.

As everyone’s circumstances are unique and every provider’s policy is unique, it is important to talk to an advisor about your personal situation before making any changes to your income protection benefit. There are some great tips here at the CAB.

Important: All information on this site is of a general nature only. When you compare or complete the assessment online, we will connect you with an advisor who can give you advice at no charge. All advisers who are authorised to use this site, for their marketing purposes, are authorised financial advisers. A full list of advisers and what they can advise on is listed here under our terms & conditions of this site usage.

Rowena Williams
Rowena Williams
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Quick and easy, actually listen to what I wanted and didn’t try and push anything else on to me
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Kezza S
1701478361
Well knowledgeable and prompt when responding to queries
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Nathan Walraven
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Maggie Silva
Maggie Silva
1699935650
At first I was skeptical but after doing a little reasearch on The Mortgage and Insurance Shop, there was nothing but positive reviews.Blake really went above and beyond to provide me with as many costs/quotes that suited my financial situation. He provided all the information I needed and explained everything, he made sure I was covered in all the areas I needed and provided great support. He's super knowledgeable and very efficient.I highly recommend Blake, he's amazing!
Blake really helped me understand how the Insurance scene works in New Zealand. The service was prompt and to the point. Would absolutely recommend him to all who need to make informed choices.
Hayley Evans is highly recommended broker, very professional communication excellent Hayley was able to help what I wanted I would recommend Hayley to others. My only regret was I did not do this sooner. Talahiva Riggs
Killian O'Neill
Killian O'Neill
1696285719
Very helpful and knowledgeable
Darryl Karp
Darryl Karp
1695961379
Easy to deal with and got the right insurance, thanks Hayley
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Yvette .B
1694394130
Nicole was a great help and had lots of knowledge.I did not feel rushed and was given options, that at the end of the day was my decision.Very happy with how everything worked out and highly recommend!
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Julie Pannell
1691894714
Great service and follow up 💯
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Ben Watson
1691631426
Hayley was professional and accommodating to everything we requested. She helped with multiple revisions to our insurance quotes and was easy to get hold of and quick to respond. It's great having that personal assistance when dealing with multiple policies etc. Thanks
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Jodie Oleary
1690591240
Awesome service! Highly recommended! Caring and friendly, made every step so easy and stressfree! Go Hayley!!!!! Thanks for all your help!!!!
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Jason de Vink
1689645245
Blake was very knowledgeable and easy to deal with, definitely recommended!
Braeden Pomana
Braeden Pomana
1689332142
Hayley was a breeze and lovely to deal with highly recomend
Cairo Warner
Cairo Warner
1689057779
Being a super busy person I had tried to get life insurance in the past and put it on the back burner because of how much time it took up. My partner got a hold of these guys and I had Hayley contact me. Hayley was absolutely amazing to work with. She would call me and tell me in layman’s terms what I needed to do. Thank you heaps Hayley!!!
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