What is income protection insurance in New Zealand?

Income protection pays a regular monthly benefit if illness or injury stops you working. After a chosen wait period, the insurer pays an agreed percentage of your income – usually up to 75% of gross earnings – until you return to work, or until the end of the benefit period you selected.

How much does income protection cost in NZ?

It depends on your age, occupation class, income, the wait period and benefit period you choose, the cover structure and your health history – and those factors move the price a long way. Rather than publish indicative figures that may not reflect your situation, we'd rather talk it through: an adviser can compare real numbers across the major NZ insurers for you.

What is the difference between indemnity and agreed value cover?

With indemnity cover, your income is confirmed at claim time, so a drop in earnings can reduce what you're paid. With agreed value cover, income is verified upfront and the benefit is locked in. Agreed value costs more and has become harder to obtain in New Zealand, though loss-of-earnings structures offer a middle ground.

How long is the wait period before payments start?

Common wait periods are 4, 8, 13, 26 and 52 weeks. A 4-week wait is the option we'd generally point to, because cover starts paying soonest. Longer waits cost less but rely on you self-funding, so they suit some households and not others. Payments are usually made monthly in arrears, so a 4-week wait means the first payment lands around eight weeks after you stop work.

How long will income protection pay me for?

You choose the benefit period. Through to age 65 (some insurers offer age 70) is the full-term structure, since no one can know in advance how long a condition will keep them off work. A 2 or 5-year benefit period costs less and is generally chosen to fit a budget rather than because the risk ends at that point.

Do I still need income protection if I have ACC?

Usually yes. ACC only covers accidents, and most long claims in New Zealand are caused by illness – cancer, heart conditions, mental health and degenerative back problems. ACC also pays on its own assessment of your earnings, which often understates what a self-employed person actually lives on.

Will my benefit be reduced by ACC payments?

Generally yes. NZ income protection policies offset ACC weekly compensation and certain other income, so the cover sits on top of ACC rather than duplicating it. Getting this structured properly is one of the main reasons to use an adviser rather than buying online.

Is income protection tax deductible in New Zealand?

It depends on the structure. Premiums on a taxable (indemnity) income protection policy are generally deductible, and the benefit is then taxable as income. Non-taxable structures work the other way – no deduction, but benefits are paid free of tax. We'll explain which suits you and recommend you confirm with your accountant.

Does income protection cover redundancy?

No. Income protection responds to illness and injury only. Some mortgage repayment policies include limited redundancy cover, usually for up to six months and with strict qualification criteria – we can tell you whether it's worth including.

Am I covered for mental health conditions?

Many NZ policies cover mental health claims, but terms vary widely: some insurers limit the benefit period for mental health to two years, and applicants with a history of anxiety, depression or stress-related leave may face an exclusion or loading. This is a key area where wording comparison matters.

Can I get income protection if I'm self-employed?

Yes, and it's often more important. Insurers will typically ask for two years of financial statements or IR returns. Newer businesses can still get cover, sometimes with a lower initial benefit that can be increased once trading history is established.

What if I go back to work part-time?

Most policies pay a partial or proportionate benefit that tops up reduced earnings while you rebuild your hours. Many also include a rehabilitation or return-to-work benefit that helps fund retraining, equipment or workplace changes.

A New Zealand tradesperson with his arm in a sling sharing coffee with his partner in a bright kitchen

Income Protection NZ · Personal Cover

Replace part of your income while you can't work

Income protection pays a monthly benefit if illness or injury stops you earning – so the mortgage gets paid and life keeps moving while you focus on getting well. ACC covers accidents; this covers the rest.

Talk to an adviser

What it does

What income protection actually pays for.

Income protection replaces a set percentage of your earnings – generally up to 75% of gross income – while you're medically unable to work. Payments begin once your chosen wait period has been served, and continue monthly until you recover or the benefit period ends.

It's the cover that keeps ordinary life running. Not a lump sum for one big cost, but a salary substitute that lands in your account every month while your ability to earn is on hold.

For most New Zealand households, the mortgage is the reason it exists. Everything else can flex – the home loan can't.

A monthly benefit typically covers…

Mortgage or rent payments
Power, insurance, rates and everyday bills
Groceries and fuel
School costs and childcare
Loan and credit card repayments
KiwiSaver contributions on some policies
Rehabilitation and return-to-work support
Keeping savings intact for later

Structure & options

How income protection is structured in NZ.

Two policies with the same monthly benefit can pay very differently. These are the decisions that determine what actually arrives in your account.

Indemnity income protection

The benefit is set as a percentage of your income – commonly up to 75% – but the amount actually paid is confirmed against your earnings at claim time. Cheaper premiums, with more proof required when you claim.

Agreed value income protection

Your income is verified and locked in when the policy is issued, so the monthly benefit is certain regardless of what you earn later. It's available to salaried (PAYE) employees as well as self-employed and variable-income clients, though insurer availability and terms vary – we'll check what you qualify for.

Loss of earnings

A middle ground offered by several NZ insurers – underwritten upfront like agreed value, but the claim is measured against your actual pre-disability earnings, usually the best 12 months of the last three years.

Mortgage & rent cover

A close cousin priced around your housing commitment rather than your salary. Often used alongside, or instead of, income protection where the mortgage is the main pressure point.

Wait period (stand-down)

How long you wait before payments begin – typically 4, 8, 13, 26 or 52 weeks. A 4-week wait gets cover paying soonest and is the stronger structure; longer waits reduce the premium but leave more for you to self-fund.

Benefit period

How long payments continue – to age 65 (sometimes 70) is the full-term structure, because no one knows what could happen to them. Shorter terms like 2 or 5 years exist mainly as a way to reduce premium, not because the risk stops there.

Definitions of disability, offset rules and mental health terms vary between insurers. Always read the policy wording – or let us do the comparison for you.

Who it's for

Who typically needs income protection in NZ.

Your income is the asset every other plan depends on. Income protection is about the months – sometimes years – where that asset stops producing.

You have a mortgage

The mortgage doesn't pause for illness. Income protection is the cover most often used to keep repayments running through a long recovery.

You're self-employed or a contractor

No sick leave, no employer top-up, and business income that stops with you. This is the group most exposed in New Zealand.

You work in a trade or on the tools

Physical work means a back, knee or shoulder injury can end earning capacity for months. Occupation class matters – we'll get you rated properly.

One income carries the household

If your household can't run on your partner's income alone, income protection is usually more urgent than a lump-sum cover.

Illness would leave you with nothing

ACC covers accidents only. Cancer, heart disease, stroke, mental illness and back conditions are the claims ACC won't touch.

Your savings would run out inside 3 months

A useful gut check. If three months without pay would stretch the budget, a 4-week wait period is the safer structure – we can talk through what that looks like.

ACC & the gap

Where ACC stops and cover starts.

New Zealand's ACC scheme is generous by world standards – but it's an accident scheme. The long claims that break household budgets are usually illness, and illness sits entirely outside it.

Check your ACC position

ACC covers accidents – not illness
ACC weekly compensation pays up to 80% of your pre-injury earnings after a stand-down, but only for injuries. Illness claims (cancer, heart conditions, mental health, most back degeneration) get nothing.
80% is calculated on their terms
ACC uses your PAYE or IR-declared earnings. For self-employed New Zealanders with reinvested income or a company structure, that figure is often far lower than the income you actually live on.
ACC offsets your policy benefit
Most NZ income protection policies reduce their payment by any ACC weekly compensation received, so cover is designed to sit on top of ACC – not duplicate it.
CoverPlus Extra for self-employed
Self-employed clients can agree a fixed level of ACC cover in advance. We'll factor that into your income protection design so you're not paying twice for the same risk.
Total cover is capped
Insurers cap combined income replacement – typically around 75% of gross pre-tax income – so the cover always leaves an incentive to return to work.

How much cover

How much income protection is enough?

Cover is capped so you're always better off working, so the real design work is in the wait period, the benefit period and how your income is evidenced. An adviser will size the benefit against your actual income and household costs.

Talk to an adviser

Often starts around 60–75% of gross income
That's the usual NZ ceiling for taxable benefits. Non-taxable structures are set at a lower percentage, because the payment arrives in your hand rather than being taxed as income. We'll confirm the exact limits with the insurer for your situation.
Think about the sick leave you'd actually use
A shorter wait like 4 weeks means you don't have to run your leave down to keep the mortgage paid. If you have a lot of accumulated leave, a longer wait is one way to trim the premium – but it's a trade-off, not an upgrade.
Consider how the wait period sits with your buffer
Most people are better served by a 4-week wait. Stretching it to 13 weeks or beyond is usually the biggest lever on price, and it can be landed on where there's genuinely enough leave and savings to cover that gap – it isn't suitable for everyone.
Benefit period – full term, or trimmed to fit the budget
Cover through to age 65 is the full-term structure, because none of us know what's ahead. A 2 or 5-year benefit period is an option to bring the premium down rather than a like-for-like alternative – it's a trade-off we can talk through.
Consider the extras that tend to get used
Inflation indexation, a booster or rehabilitation benefit, and cover for KiwiSaver contributions so retirement saving doesn't have to stop while you're off work.

How it compares

Income protection vs mortgage, trauma and TPD cover.

These covers are often confused, and they solve different problems. Most households don't need all four – but they do need the right combination.

Cover	What it pays	Best for
Income protection	A monthly benefit while illness or injury stops you working	Replacing ongoing income through a long recovery
Mortgage protection	A monthly amount sized to your home loan repayments	Protecting the mortgage on a tighter budget
Trauma cover	A one-off lump sum on diagnosis of a listed serious condition	Immediate costs and choice of treatment
TPD insurance	A lump sum if you'll never work again	Permanent, life-changing disability

Cost

What drives the price of income protection.

Income protection is the most heavily underwritten personal cover in New Zealand, because the insurer is pricing both your health and the physical demands of your job.

Age

Premiums rise every year on rate-for-age structures, so locking in cover earlier can be cheaper across the life of the policy, depending on the structure and your situation.

Occupation class

The biggest single driver. Insurers band occupations from professional/office through to heavy manual, and rates can differ by several times between classes.

Wait and benefit period

A 4-week wait through to age 65 is the strongest structure, and also the most expensive. Stretching the wait to 13 weeks reduces the premium, though it shifts more of the risk back to you.

Indemnity vs agreed value

Agreed value costs more because the insurer carries the risk of income falling. Indemnity is cheaper but requires proof of earnings at claim time.

Smoker status

Smoker rates can be close to double. Most insurers reprice you after 12 months smoke-free – tell us and we'll ask on your behalf.

Health and claims history

Back injuries, mental health history, BMI and chronic conditions are underwritten closely for income protection, more so than for life cover.

The fine print

What income protection doesn't pay.

We'd rather you know this upfront than find out at claim time. None of it is unusual – but it's the part most online quotes skip over.

The most common reason an income protection claim is declined in New Zealand isn't a technicality in the wording. It's health history that wasn't disclosed at application. Tell your adviser everything, even the things you think are irrelevant.

Common exclusions and limits

A wait period must be fully served before any benefit is paid
Pre-existing conditions disclosed at application and specifically excluded
Non-disclosure of medical history – the leading cause of declined claims in NZ
Mental health conditions and back complaints are often limited, loaded or excluded depending on history and occupation
Redundancy and business downturn are not covered by income protection (some mortgage repayment policies add limited redundancy cover)
Benefits reduce by ACC weekly compensation, sick leave and other income received under a policy
Self-inflicted injury, war, criminal activity and normal pregnancy

Insurers we compare

We compare New Zealand's leading income protection insurers.

Because we're independent advisers – not tied to one insurer – we can compare occupation classes, disability definitions, offset rules, mental health terms, underwriting appetite and price across the major NZ providers, then recommend what actually suits you.

A disclosure statement is available on request and free of charge.

How Marble Life helps

Adviser-led, no-cost, no pressure.

Our advisers are paid by the insurers when a policy is placed, so there's no cost to you for the advice, the comparison, or ongoing support at claim time.

01
Free discovery call
We map your income, sick leave, ACC position, savings and mortgage – then work out what a realistic time off work would cost you.
02
Occupation and wording check
Income protection is won on occupation class and the definition of disability. We compare wordings across NZ insurers, not just the price.
03
Structure and place cover
Indemnity or agreed value, wait period, benefit period, taxable or non-taxable – built around your budget and how you're paid.
04
Claims advocacy
At claim time we gather the medical and financial evidence, coordinate with ACC and manage the insurer through to payment.

Related cover

Income protection works best alongside…

A monthly benefit handles the long recovery. These covers handle the immediate costs, permanent disability and fast access to treatment.

Mortgage Protection

A benefit sized around your home loan repayments.

Learn more

Trauma Insurance

A lump sum on diagnosis of a serious illness.

Learn more

TPD Insurance

Cover if illness or injury means you can never work again.

Learn more

Health Insurance

Fast access to private treatment, specialists and non-funded drugs.

Learn more

FAQ

Income protection NZ, common questions.

Quick answers to the questions New Zealanders ask us most often. Something not covered? Just call or drop us a note.

Ask an adviser

What is income protection insurance in New Zealand?
Income protection pays a regular monthly benefit if illness or injury stops you working. After a chosen wait period, the insurer pays an agreed percentage of your income – usually up to 75% of gross earnings – until you return to work, or until the end of the benefit period you selected.
How much does income protection cost in NZ?
It depends on your age, occupation class, income, the wait period and benefit period you choose, the cover structure and your health history – and those factors move the price a long way. Rather than publish indicative figures that may not reflect your situation, we'd rather talk it through: an adviser can compare real numbers across the major NZ insurers for you.
What is the difference between indemnity and agreed value cover?
With indemnity cover, your income is confirmed at claim time, so a drop in earnings can reduce what you're paid. With agreed value cover, income is verified upfront and the benefit is locked in. Agreed value costs more and has become harder to obtain in New Zealand, though loss-of-earnings structures offer a middle ground.
How long is the wait period before payments start?
Common wait periods are 4, 8, 13, 26 and 52 weeks. A 4-week wait is the option we'd generally point to, because cover starts paying soonest. Longer waits cost less but rely on you self-funding, so they suit some households and not others. Payments are usually made monthly in arrears, so a 4-week wait means the first payment lands around eight weeks after you stop work.
How long will income protection pay me for?
You choose the benefit period. Through to age 65 (some insurers offer age 70) is the full-term structure, since no one can know in advance how long a condition will keep them off work. A 2 or 5-year benefit period costs less and is generally chosen to fit a budget rather than because the risk ends at that point.
Do I still need income protection if I have ACC?
Usually yes. ACC only covers accidents, and most long claims in New Zealand are caused by illness – cancer, heart conditions, mental health and degenerative back problems. ACC also pays on its own assessment of your earnings, which often understates what a self-employed person actually lives on.
Will my benefit be reduced by ACC payments?
Generally yes. NZ income protection policies offset ACC weekly compensation and certain other income, so the cover sits on top of ACC rather than duplicating it. Getting this structured properly is one of the main reasons to use an adviser rather than buying online.
Is income protection tax deductible in New Zealand?
It depends on the structure. Premiums on a taxable (indemnity) income protection policy are generally deductible, and the benefit is then taxable as income. Non-taxable structures work the other way – no deduction, but benefits are paid free of tax. We'll explain which suits you and recommend you confirm with your accountant.
Does income protection cover redundancy?
No. Income protection responds to illness and injury only. Some mortgage repayment policies include limited redundancy cover, usually for up to six months and with strict qualification criteria – we can tell you whether it's worth including.
Am I covered for mental health conditions?
Many NZ policies cover mental health claims, but terms vary widely: some insurers limit the benefit period for mental health to two years, and applicants with a history of anxiety, depression or stress-related leave may face an exclusion or loading. This is a key area where wording comparison matters.
Can I get income protection if I'm self-employed?
Yes, and it's often more important. Insurers will typically ask for two years of financial statements or IR returns. Newer businesses can still get cover, sometimes with a lower initial benefit that can be increased once trading history is established.
What if I go back to work part-time?
Most policies pay a partial or proportionate benefit that tops up reduced earnings while you rebuild your hours. Many also include a rehabilitation or return-to-work benefit that helps fund retraining, equipment or workplace changes.

Next step

Find out what six months without an income would cost you.

Book a free 20-minute Personal Risk Assessment with a Marble Life adviser. We'll map your sick leave, ACC entitlement, savings and existing cover, then tell you honestly how much income protection – if any – is worth paying for.

Book Your Personal Risk Assessment Discover Your Cover Choices

Replace part of your income while you can't work

What income protection actually pays for.

How income protection is structured in NZ.

Indemnity income protection

Agreed value income protection

Loss of earnings

Mortgage & rent cover

Wait period (stand-down)

Benefit period

Who typically needs income protection in NZ.

You have a mortgage

You're self-employed or a contractor

You work in a trade or on the tools

One income carries the household

Illness would leave you with nothing

Your savings would run out inside 3 months

Where ACC stops and cover starts.

How much income protection is enough?

Income protection vs mortgage, trauma and TPD cover.

What drives the price of income protection.

Age

Occupation class

Wait and benefit period

Indemnity vs agreed value

Smoker status

Health and claims history

What income protection doesn't pay.

We compare New Zealand's leading income protection insurers.

Adviser-led, no-cost, no pressure.

Free discovery call

Occupation and wording check

Structure and place cover

Claims advocacy

Income protection works best alongside…

Mortgage Protection

Trauma Insurance

TPD Insurance

Health Insurance

Income protection NZ, common questions.

What is income protection insurance in New Zealand?

How much does income protection cost in NZ?

What is the difference between indemnity and agreed value cover?

How long is the wait period before payments start?

How long will income protection pay me for?

Do I still need income protection if I have ACC?

Will my benefit be reduced by ACC payments?

Is income protection tax deductible in New Zealand?

Does income protection cover redundancy?

Am I covered for mental health conditions?

Can I get income protection if I'm self-employed?

What if I go back to work part-time?

Find out what six months without an income would cost you.