Disability Income & Mortgage Protection Cover
Disability Income Protection & Mortgage protection Cover insures the beneficiary’s earned income against the risk that an illness or injury creates a barrier for a worker to complete the core functions of their work, based on a GP, medical certificate.
There are generally two structures of Income Protection: “Indemnity” or “Agreed Value”.
Mortgage Protection is agreed value based on your income or your mortgage or rent payments, if your earning capacity is seriously affected by illness or disability ensuring your existing lifestyle is protected. Mortgage Protection Cover has No ACC offsets.
Note, when you take out Income Protection or Mortgage Protection insurance, your insurer relies on information you provide to calculate your premiums and the terms of your cover. You have a duty to disclose material facts that would influence the judgement of a prudent insurer. Material facts may relate to your age, occupation, your medical history, and whether you smoke/Vap or non-smoker.
Agreed Value
Agreed Value means that the monthly sum insured is ‘agreed upon’ from the outset. This means that you don’t have to prove your income at the time of your claim. Your claim amount will remain the same, regardless of any change in your income. Your benefit calculations for Agreed Value are typically based on a percentage of your Gross Income and the benefit paid is usually tax free. All benefits are paid monthly.
The ‘waiting period’ or stand down timeframe is the time between you becoming unable to work and receiving your first income protection payment. You can generally choose a waiting period of between 14 days and one years, subject to the provider. A shorter waiting period resulting in a higher premium.
Indemnity
Indemnity means that you will need to provide evidence of your income at the time of your claim. Your claim amount will be recalculated based on up to 75% of your pre-disability income or the monthly sum insured, whichever is the lesser. All benefits are paid monthly.
However, under the indemnity structure, you will be required to pay income tax on benefit payments received, subject to the provider.
The ‘waiting period’ or stand down timeframe is the time between you becoming unable to work and receiving your first income protection payment. You can generally choose a waiting period of between 14 days and one years, subject to the provider. A shorter waiting period resulting in a higher premium.
ACC offsets could occur with an accident-related claim that could reduce your Disability Income benefit entitlements as you are unable to receive more than your pre-disability income.
20% of the general population in New Zealand have a disability and musculoskeletal disorders are a relatively common cause, affecting 30% of the working-age population.
The financial consequences of suffering a disability or extended illness could be devastating for you, your family, and/or your lifestyle. Income can exceeds a net worth of 1.8 million for an average income earner, over their lifetime.
Contact us today for free no obligation financial advice.
Compare Insurance Provider Benefits
The following information is provided as a guide with which to compare quality Disability Income Protection Insurance providers available in NZ. Here we identify similarities and subtle unique differences specific to each insurance provider, as per their brochures, giving you the opportunity to tell us why this provider is right for you.
Sovereign
PARTIAL DISABILITY INCOME BENEFIT
To help you to make the transition between total disablement and your return to work.
ADVANCE PAYMENT INCENTIVE
If your claim is accepted within the waiting period, you can receive half of your first month’s benefit at the end of the waiting period.
LEAVE WITHOUT PAY BENEFIT
If you become totally disabled while on leave without pay, due to maternity, paternity, or work sabbatical for 12 months or less, your benefit entitlement could be paid for.
SUSPENSION OF COVER BENEFIT
Should you go on parental leave, sabbatical leave, study leave, or leave without pay, you can apply to us to suspend your cover.
BACK TO WORK PAYMENT BENEFIT
If you return to work between 12 and 24 months after claiming, you could receive a lump-sum payment equal to three times your monthly benefit claim amount.
About Sovereign:
After taking care of New Zealanders for the past 25 years, Sovereign is turning insurance on its head by dedicating ourselves to helping you take charge of your health.
Sovereign has an A.M. Best financial strength rating of A+ (Superior)*.
* Given by A.M. Best Inc., an approved insurance rating agency.
Fidelity Life
PARTIAL DISABILITY INCOME BENEFIT
Where a covered employee has been totally disabled for at least 14 continuous days, and subsequently can return to work part-time but with a reduction in earnings, a partial benefit may be payable..
ADVANCE PAYMENT INCENTIVE
Will pay 50% of the first monthly benefit after the end of the wait period*.
LEAVE WITHOUT PAY BENEFIT
This may allow you to cancel this cover with a right to reinstate without evidence of health if you take a period of leave without pay or become involuntary unemployed for reasons other than disability.
RELOCATION BENEFIT
This covers the cost of economy airfare back to New Zealand if disabled whilst overseas (maximum $5,000).
HOSPITALISATION/NURSING CARE BENEFIT
This provides additional financial support for bed care during the waiting period for up to 90 days.
UNEMPLOYMENT BENEFIT
Benefits can still be paid even if you are unemployed.
About Fidelity Life:
Fidelity Life (founded in 1973) with a vision of a New Zealand-owned and controlled company where advisers and staff could “have their say” and provide direct input into the company and its products.
Fidelity Life has an A.M. Best financial strength rating of A- (Excellent)*.
* Given by A.M. Best Inc., an approved insurance rating agency.
Partners Life
PARTIAL DISABILITY INCOME BENEFIT
Pays a partial benefit if you are earning less than 75% or your pre-disability income, you are unable to work more than 75% of your pre-disability hours, or you are unable to perform 25% of key tasks and responsibilities.
SPECIFIC INJURY BENEFIT
Pays benefits for a minimum period (maximum of Payment Term) depending on severity of injury regardless of whether you are disabled or not.
LEAVE WITHOUT PAY BENEFIT
Provides full cover for up to 12 months if unemployed or on unpaid leave.
PARTIAL DISABILITY BONUS BENEFIT
If you go back to work (after being totally disabled or totally and permanently disabled) and reduce your claim to a partial disability benefit, a bonus of 25% of the partial disability benefit is paid for up to 12 months.
CHILD CARE ASSISTANCE BENEFIT
Pays up to $800 per month per child for extra child care costs incurred as a result of being disabled for up to 6 months.
About Partners Life:
Partners Life is a relatively new company to the Life Insurance market in New Zealand (approximately 6 years).
We understand how difficult and stressful it can be when it comes time to submit a claim and at Partners Life there are no surprises or shocks. We have a philosophy embedded into the fabric of the company that all genuine claims are paid as quickly and with as much empathy as possible.
Partners Life has an A.M. Best secure rating of B++ (Good)*.
* Given by A.M. Best Inc., an approved insurance rating agency.
AIA
PARTIAL DISABILITY INCOME BENEFIT
You will receive a partial benefit if you are totally disabled for 7 days or more and return to work in a reduced capacity. Your benefit will be based on the reduction in work hours and paid in arrears.
PREGNANCY PREMIUM WAIVER
Waive your premiums for up to six months in the event of pregnancy.
LEAVE WITHOUT PAY BENEFIT
You can choose to suspend your premiums and cover for up to 12 months after which full reinstatement and no extra waiting period will apply.
RETURN TO HOME BENEFIT
If the life assured suffers a disability while working outside of New Zealand, and the claim is accepted, you can receive payment of 3 times the monthly sum assured.
HOME CARE BENEFIT
If full-time care is required, you will receive up to six months of your monthly benefit to a maximum of $2,500 per month.
UNEMPLOYMENT BENEFIT
If you’re unemployed and suffer a disability within 12 months, the normal assessment applies.
About AIA:
We’ve been helping New Zealanders since 1981. And as part of the AIA Group, one of the largest life insurance companies in the Asia Pacific region, our customers have the assurance that we’ll always be there for them when it counts, whatever life may bring.
AIA has a Standard & Poor’s (Australia) Pty Limited financial strength rating of AA- (Very Strong).
* Given by Standard & Poor’s (Australia) Pty Limited, one of the world’s leading providers of independent credit risk research across industries and benchmarks, asset classes and geographies.
Asteron Life
INCOME UPDATE BENEFIT
You’re free to increase your cover by up to 10% each year with no further medical underwriting. This can be handy if you get a pay raise at work.
PREGNANCY PREMIUM WAIVER
If you become pregnant we’ll pay your premiums for 6 months. Income protection is still important even if you’re on maternity leave – and when you’re expecting a baby you might find you need to budget more.
RETURN TO WORK BENEFIT
If you can return to work full time, you can receive a bonus of one month’s benefit after your first three months back at work. You can also receive a further two months’ benefit after your first six months back at work.
OVERSEAS ASSIST BENEFIT
If you need to make a claim on your Income Protection policy while you’re overseas, we’ll reimburse you $10,000 for your travel costs back to New Zealand.
FAMILY ASSIST BENEFIT
Payment for a nurse or family member to look after you at home for up to 6 months.
DEPENDENT RELATIVE
If you have to stop working to undertake the full time care of a family member, you can receive a monthly payment benefit for up to 6 months.
About Asteron Life:
To Asteron Life, life insurance is all about getting the most out of today – knowing that if things go wrong, you’ve got plans in place. Asteron Life has been named New Zealand’s Best Life Insurance Company and Women’s Employer of the Year for 2015.
Asteron Life has a Standard & Poor’s financial strength rating of A+ (Strong).
* Given by Standard & Poor’s, one of the world’s leading providers of independent credit risk research across industries and benchmarks, asset classes and geographies.
OnePath
PARTIAL DISABILITY INCOME BENEFIT
A partial benefit if you are only able to work in a reduced capacity due to illness or injury. If you have been totally disabled for 7 days or more and then return to work in a reduced capacity (earning 75% or less of your pre-disability income), a Partial Disability Benefit may be payable once the waiting period is over.
EMERGENCY TRANSPORTATION BENEFIT
Financial assistance for the costs of any emergency transport you require as a result of your total or partial disability.
RETURN TO WORK BENEFIT
A bonus payment on returning to work after being on a total disability claim. After 3 consecutive months of full-time employment, a benefit equal to 1 times the monthly sum insured is payable. After 6 consecutive months of full-time employment, a benefit equal to 2 times the monthly sum insured is payable.
RETURN TO HOME BENEFIT
Cover for transport costs to get back to New Zealand if you suffer a disability overseas.
SPECIAL CARE BENEFIT
Cover if you require full-time care at home.
INCREASING INCOME BENEFIT
The ability to increase your cover, without providing any further evidence of your health, if you have an increase in salary. On each salary increase you have the option to increase your cover by up to 10% per policy year in addition to CPI, without further medical assessment.
About OnePath:
We’ve been paying claims for over 12 years and throughout that time, we have remained committed to our philosophy of doing what’s right by our customers every time. That means we look for ways to pay claims – not how to get out of paying claims.
OnePath has a Standard & Poor’s (Australia) Pty Limited financial strength rating of AA- (Very Strong).
* Given by Standard & Poor’s (Australia) Pty Limited, one of the world’s leading providers of independent credit risk research across industries and benchmarks, asset classes and geographies.
Contact us today for free no obligation financial advice.