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.

 
Rachael Manson
Rachael Manson
03:27 30 May 20
Alan has been brilliant to deal with and extremely patient as we worked through the changes that we were seeking for our life cover and income protection requirements.
Celia Grigg
Celia Grigg
23:36 21 May 20
Hayley was great, from responding to my initial inquiry to finalising my policy. She provided good information and communicated with me every step of the way - efficient, thorough and friendly. She went above and beyond.
Wang Emily
Wang Emily
01:59 19 Apr 20
Hayley has been very helpful and professional with her insurance services, she is committed to work for the best interest of her clients , friendly to deal with and flexible to suit clients’ requirement. Definitely Recommended!
Toko Ngakiau
Toko Ngakiau
20:19 29 Mar 20
I am very wary of random calls about insurance, but I found Daniel from IronOak to be very transparent and a pleasure to deal with.On all occasions he was able to come out and visit us. He explained in detail what we were looking at, and offered a number of comparisons. HIGHLY RECOMMENDED
Hannah Lawrence
Hannah Lawrence
21:00 15 Mar 20
Hayley was very efficient and always delivered on her promises. She put together a good package for me. I would highly recommend Hayley.
Jay Nimbus
Jay Nimbus
08:11 15 Mar 20
Daniel was great to deal with and made seemingly complicated decisions a lot simpler than I expected. I had been stressing about it for a while, wish I had got in touch sooner. Much thanks!
Annette Page
Annette Page
22:39 01 Mar 20
Prompt, professional, pragmatic advice and service. Many thanks.
CrazySmurf Azrial
CrazySmurf Azrial
11:20 28 Feb 20
Hayley was awesome to deal with, answered all my questions and followed up with me weekly to keep me informed throughout the whole process. It can be daunting but she made the process easy. She was easy to talk to and didn't feel pressured.Thanks Hayley for organising everything and helping me through the whole process.
Paul has helped me to find the best option for my family insurance. He made everything easy.
Trixie Lawton
Trixie Lawton
15:55 25 Dec 19
I found Hayley very pleasant to speak to and was explained everything in great detail and in easy terms
Kayleigh Price
Kayleigh Price
22:12 16 Dec 19
Paul was very easy to deal with and made income protection insurance seem much clearer. He gave sound advice, was efficient, friendly and I would recommend him to anyone.
Sunil Kadri
Sunil Kadri
23:23 01 Dec 19
Paul did alot of work to find the right policy for me, was very patient as I wavered, and even helped me with the right questions to ask of my insurer on their parallel policy. Overall he proved an excellent broker whom I'd gladly recommend, and go back to myself.
 

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