Income Protection or Life Insurance? The answer obviously depends on your circumstances, needs and goals. But there are good reasons to make Income Protection a priority.
The unexpected can happen
Did you know that, in the year to May 2018, 13,865 people were injured in road accidents in New Zealand – and 388 people lost their lives?
This is just a sobering reminder that the unexpected can happen. While Life Insurance pays a lump sum in case of death, Income Protection is designed to replace your income if an accident stops you from working.
Of course, if you are one of the 10% who has money tucked away for a rainy day, you’re already in a good position. But even so, wouldn’t you rather keep that money for something you really want, rather than using it to pay your bills because you are off work and out of sick leave?
It’s about the day-to-day
Do you rely on your income to meet your day-to-day costs? Without a form of replacement income, would you be able to meet your accommodation and living costs?
That’s where Income Protection can make all the difference. Sure, you might be able to rely on family and friends for a short period of time, and ACC or Work and Income are likely to assist. However, ACC only covers you for accidental injury (not sickness), and Work and Income will only provide a minimum income by way of a benefit.
Income Protection, on the other hand, will pay you a monthly income after your agreed wait period has passed, whether you suffer an illness or an injury.
Sole income earner?
If you are single, with no children, your need for Income Protection cover is usually much higher than your need for life cover., as you need to provision for when you are alive, rather than looking after others in the event you are no longer here.
When you are the sole income earner, it’s important to make sure that, in the event you are off work for an extended period of time, you are still able to keep paying the bills. So, while having Life Insurance will help out your family in the event of your untimely death (and it’s certainly something to consider), if you don’t have Income Protection Insurance, who will help them out while you are still alive but not working?
An Adviser Disclosure Statement is available free and upon request.