Why income protection insurance matters: securing your financial future

We understand that your ability to earn an income is one of your greatest financial assets. Yet, many New Zealanders overlook the vulnerability of this income in the face of illness or injury. Income protection insurance is designed to safeguard your lifestyle, your goals, and your loved ones – even when the unexpected happens.

What is income protection insurance?

Income protection insurance provides you with a regular monthly income if you’re unable to work due to illness or injury. It typically pays up to 75% of your income, ensuring that you can still meet your financial commitments while focusing on your recovery. Whether you’re employed or self-employed, this coverage is especially valuable in providing you with financial stability during uncertain times.

Why it’s so important

Most people insure their homes, vehicles, and belongings – but forget to insure their income, the very thing that enables them to afford those assets in the first place. Here’s why income protection insurance should be part of your financial planning:

If you were unable to work for an extended period, such as six months or more, maintaining your lifestyle could quickly become a challenge. Covering essential expenses like your mortgage or rent, groceries, utility bills, and childcare may become difficult without a steady income. Income protection helps you continue meeting these financial obligations, so you don’t have to depend solely on your savings, government assistance, or support from others.

Financial stress can also significantly hinder your recovery from illness or injury. Worrying about how to make ends meet only adds pressure during a time when your focus should be on getting better. With income protection in place, you have a steady stream of income, giving you the freedom to prioritise your health and wellbeing without the added burden of financial uncertainty.

Additionally, a serious medical condition or accident can easily derail your long-term financial plans. Goals like purchasing a home, funding your children’s education, or saving for retirement can be delayed or even abandoned. Income protection insurance helps keep those goals within reach by ensuring you have financial support during periods when you’re unable to work.

Customised cover that works for you

At Enva Financial, each income protection policy is tailored to your individual circumstances—your profession, remuneration level, and long-term goals.

Income protection policies can seem complex, but the key features are:

• Wait period – The length of time you must be unable to work due to illness or injury before benefit payments start. Common options range from 2 weeks to several months; the shorter the wait period, the higher the premium.
• Benefit period – The maximum length of time the insurer will pay benefits for a single claim. This could be a set term (e.g., 2 years or 5 years) or until a set age (e.g., age 65).
• Agreed value – Your benefit amount is fixed at the start of the policy based on an agreed figure (usually your income at application). Payments won’t change even if your income drops later.
• Indemnity value – Your benefit amount is based on your income at the time of claim, not at the time of application. This can mean a lower payout if your income has decreased since you took out the policy, but premiums are usually cheaper than agreed value.

Before making any decisions, speak with your Enva Financial adviser to ensure your income protection plan is the right fit for you, your lifestyle, and your long-term goals. We’re here to help you make confident, informed choices to secure your future.