What does income protection insurance cover
Have you ever sat in a job interview and been asked the question: “So why do you want this job?”
While we all answer something about loving our workplace’s goals, culture, or products and services, the answer running through the back of our minds is usually something along the lines of: “I have bills to pay and holidays on tropical beaches don’t come cheap.”
We study, earn qualifications, gain experience, and work, all ultimately for an income. So how can you protect that income should a sudden sickness or injury occur?
What is income protection insurance and how does it work?
If you become sick or suffer an injury that stops you from being able to work, income protection insurance ensures you can still maintain some level of income.
While we can, of course get up to 10 days of sick leave per year, many serious sicknesses and injuries can put you out of work for weeks or months at a time, which makes for a difficult situation with your employer and your income.
Following an insured event (injury or sickness), you will first go through the ‘waiting period’ before you can make a claim. The waiting period is the length of time you must wait after becoming unable to work due to illness or injury before your insurance benefits begin to be paid. This period will depend on what you set up when you took out your insurance policy, as some policies will have a shorter waiting period (30 days), while others will be longer (90 days).
Once you’ve made an income protection claim and it has been approved, you will start receiving payments of up to 75% of your regular salary. These payments will continue for as long as you are off work, in line with the duration of your benefit period (this could be anywhere from several months to several years, again depending on your exact policy).
Note that ACC is an option for income protection if you are injured and unable to work – but it does not cover sicknesses.
Which injuries or sicknesses are typically covered?
If we were to list every sickness and injury that’s typically covered, we’d be here all day. Plus, every income protection insurance provider is a little different, so you’ll need to carefully read your Policy Document anyway, so you know exactly what you’re covered for.
What’s easier to list is what you’re not covered for, which is typically:
- Pre-existing medical conditions
- Self-harm
That’s usually about it. Any new medical conditions and any other injuries are generally covered, depending on the terms of your policy.
How income protection supports your financial safety net
Income protection insurance is designed to keep a portion of your income flowing into your bank account, even when you can’t work.
One study found that in the March 2022 quarter, 44,200 employed people (out of 2.8 million) were away from work for a full week due to sickness, illness, or injury. That’s not counting serious injuries, and it’s still a high number of people losing their ability to earn an income all over New Zealand.
Income protection insurance can help you pay your bills if you can’t work, from mortgage or rent payments, to loan repayments, credit card debt, grocery bills, and utilities. It is not set up to be a payment for your medical bills specifically, but rather a replacement of partial income for whatever you need it for.
That’s why income protection insurance might be a helpful option for anyone who needs a steady income to meet their financial commitments. Whether that’s looking after your family, paying off a large amount of debt, or staying on top of important milestones, this insurance product could be a great Plan B to maintain some of your income should you ever suffer serious sickness or injury.
Understanding OneChoice Income Protection Insurance
OneChoice Income Protection Insurance can be a way for everyday Kiwis to enjoy a level of financial security that your future self could thank you for. Getting a quote is easy, learn more here to get started.
19 Aug 2025