In New Zealand's dynamic job market, where many enjoy employer perks like sick leave or have built solid savings, the question of whether income protection insurance is necessary often arises. While these buffers offer immediate relief for minor setbacks, they may not suffice for prolonged disabilities, making income protection a valuable addition for comprehensive security.
For Kiwi balancing high living costs with family responsibilities, this coverage replaces up to 75% of income during extended absences due to illness or injury, beyond what ACC provides for accidents. With recent economic uncertainties and rising health concerns, relying solely on savings or leave could deplete resources quickly, especially for long-term conditions like cancer or mental health issues.
Savings might cover 3 - 6 months, and sick leave starts at 10 days, but what if recovery takes years? Income protection bridges that gap, offering peace of mind without moral judgments on your preparedness.
Assessing Your Buffers
NZ law mandates 10 sick days after 6 months' employment, but it's finite. Savings are great for wait periods but erode in extended scenarios. Protection covers non-ACC illnesses, varying policies cover up to 75% after offsets (some cap lower)..
When You Still Benefit from Coverage
For chronic issues or dependents, it's essential. Example: Use savings for 13-week wait, then insurance sustains.
Advantages and Comparisons
Tax-free benefits, continuity.
|
Buffer Type |
Duration |
Limitations |
|
Sick Leave |
Short-term |
Exhausts quickly |
|
Savings |
Variable |
Depletes over time |
Enhance your safety net - get income protection quotes at LifeDirect.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.
