Should I get Income Protection Insurance?
This question I get a lot. Many people ask me about should they get Income Protection Insurance or not. Let me explain why I think Income Protection is the most important policy you can get for yourself.
Majority of New Zealanders have been sold the idea of importance of Life Insurance as the concept and surely it is important to have Life Insurance to provide your family with some funds in the event you gone. However many people failed to understand that with modern medicine it is often a very long time period from a diagnosis to death. Just think for a second if you are in the situation where you are seriously sick and do not have any money coming in…
When: Should I get Income Protection Insurance ?
- Would you be able to keep your relationship if you become a liability? I mean you are alive, you need housing, food and necessities even entertainment and no money. Would your partner be able to keep up?
- Would you be able to keep your kids in the same school if you are sick for two years and do not have any income?
- Would you have enough money to pay for the bills?
If you have answered all to all of the above “no” then when you are going to think about “Should I get Income Protection Insurance?” – the answers is “immediately”.
Income Protection Insurance is the only policy which pays you for unspecified illness meaning anything what could happen to you – income protection benefit is going to keep you financially secure.
In New Zealand many people think of disability as a result of an injury and therefore think of ACC.
Think, if you had a fall while skiing – you are covered and your income is going to be paid by ACC being 80% of your pre-disability income. But if you are diagnosed with cancer ACC pays nothing. If on the other hand you have Income Protection Insurance – the policy provides you with 75% of your pre-disability income.
For instance if you are a power-lifter (very strong guy) and had a spine sport injury then medical treatment is going to be covered by ACC however if later on your doctor would say that the injury you sustained was due to generative changes in your spine: ACC pays nothing even if it means that you are going to be in a wheel-chair. If you had an Income Protection policy the policy is going to pay your income being 75% of your current income.
Have you noticed ACC pays only 80% of pre-disability income and Income Protection Insurance pays (at most) 75%- the reason it is deliberately lower to compare to pre-disability income is to financially encourage you to come back to work.
When I get the question: “should I get Income Protection Insurance?” I always say – yes and then ask would the client want to take a further step and structure the policy in the way that no matter what he or she is going to get the highest amount of benefit. I have discussed how to construct the best Income Protection Insurance policy in this article “Best Income Protection structure”.
If you want to know how much would you pay for your Income Protection Insurance you only need to email to me: your full date of birth, your occupation and your current level of income. In return you are going to get a few quotes from major income insurance providers in New Zealand, then I would encourage you to have a meeting with me or to discuss it all over the phone or skype and you are going to get the best suitable Income Protection Insurance tailored for you and your financial goals. Income Protection policy which takes into account not only your today’s income but also your future goals and is going to provide you with financial security for many years to come.