What about Income Protection Insurance
Have you ever compared both policies in order for you to know – what would be better for you?
Have you ever asked yourself a question: what is better (?) to think that ACC would pay you? Or to put in place something specific? Or thought about Income Protection VS Mortgage Insurance makes you worry and you do not know what to decide?
In New Zealand ACC may provide cover for injuries up to certain limits, but won’t cover you for any illness. This means that only people who have Income Cover or Mortgage Insurance policy in place can feel that they are protected.
Income Cover VS Mortgage Insurance
The questions you would want to ask yourself are:
How would you cope financially if your income stop coming in?
How long would you be able to live without your normal income? A month? Two? Or a couple of weeks?
Let me remind you how an Income Protection policy works:
Income Protection Cover pays up to 75% of your pre- disability income.
The amount you would be able to claim depends on the structure of the policy. It can be Agreed value or Indemnity value. Agreed value is normally 55% of your pre – disability income and Indemnity value is 75%.
Income Protection Cover provides monthly payments for 2 years, 5 years or until you are 65 (your choice), that will depend on the cover you choose, if you are unable to work due to sickness or an accident.
Income protection cover have an agreed waiting period, which can be 2, 4, 8, 13, 26, 52 or 104 weeks -your choice, which should depend on your situation and affordability.
Income Cover allows you to continue to pay your day-to-day expenses such as your mortgage, groceries, phone bills, power and school fees.
So, even if unexpected should happen, you will receive up to 75% of your income .
What’s better Income Protection or Mortgage Insurance?
Pays you regular monthly payments if you are unable to work due to a disability, you are seriously sick, injured.
The policy can be structured for 2 years, 5 years or to the age of 65.
The waiting period can be structured to minimize the premiums you pay with options: 30, 60 or 90 days.
You can take out Mortgage Protection Insurance for your investment property. Mortgage insurance for your investment property with maximum of $3,500.
You can take out Mortgage Protection Insurance even if you are renting.
Your benefit payments under Mortgage Repayment Protection will not be reduced due to any ACC claims– this is the major difference with an “Income Protection” insurance.
You will get full amount you are insured for even if you get ACC payments.
You can make as many claims as you need over the life of your Mortgage insurance policy.
You can keep the original amount you are insured for even if your mortgage reduces.
There are monthly benefit limits: Minimum of $500 or up to maximum of $5,000.
The cover is available for employed and self-employed people.
The policy can be underwritten on two options:
1. Using your mortgage repayments.
2. Using your income.
This is a scenario which will help you to realize how valuable this policy can be for you.
I am going to compare Income Protection VS Mortgage Insurance. An Income Protection with ‘Agreed Value’ benefit and ‘Mortgage Repayment Policy’.
|Agreed Value Income Protection||30 Days Waiting Period
To Age 65
|Mortgage Repayment Policy||30 Days Waiting Period
To Age 65
|Pre-Disability Income||$80,000||Pre-Disability Income||$80,000|
|Agreed Value Monthly Benefit||$2,666||Agreed Value Monthly Benefit||$2,666|
|ACC/ Other Monthly Income at Claim||$5,333||ACC/ Other Monthly Income at Claim||$5,333|
|Annual Premium||$835.68||Annual Premium||$818.78|
|Monthly Benefit Payable at Claim||$ NIL||Monthly Benefit Payable at Claim||$2,666|
|Total Monthly Income at Claim||$5,333||Total Monthly Income at Claim||$7,999|
It is a tough call to compare Income Protection VS Mortgage Insurance and in order to do so all the personal situation should be taken into account. If you feel you want to discuss your situation please call me now 09 525 4675 or request a callback through this form
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Vlad managed to get sorted for me a medical claim for a surgery in Australia
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Important to understand: All Insurance companies in New Zealand have different rules and regulations regarding Income Cover underwriting, which means that everybody’s situation is different. It often
depends on occupation, level of income and most importantly your health, age and weight.