Securing Your Future: Understanding Income Cover in New Zealand

In today’s unpredictable world, securing your financial stability is paramount. One way to safeguard your income against unforeseen circumstances is through a form of Income Cover. If you’re in Nelson, New Zealand, Sheehan Financial offers comprehensive income cover solutions tailored to your needs. In this blog, we’ll explore what income cover is, its benefits, and why choosing Sheehan Financial is a wise decision.

What is Income Cover?

Income cover incorporates both “Income Protection Cover” and “Mortgage Repayment Cover”. It is an essential safety net for anyone earning a regular income in New Zealand. Income protection and mortgage repayment insurance are similar, both insurance products are designed to pay you a series of ongoing monthly payments in the event that you’re unable to work for a prolonged period of time. This ensures that you can continue to meet your financial obligations and maintain your standard of living during difficult times regardless of whether you have a mortgage or not.

Income protection and mortgage repayment both take separate approaches when it comes to ACC. In New Zealand, if you’re unable to work due to injury, then you can expect to receive ACC payments. Generally, income protection policies will “offset” these ACC payments from your claim payments, this means that your claim payments will reduce, or possibly not be made at all if you’re receiving ACC to cover any loss of income.

Mortgage repayment cover approaches this differently, and will typically not offset ACC at all, meaning that you can receive both ACC and your full mortgage repayment lump sum. This amount can be determined by your gross salary and despite its name you do not need to have a mortgage to take it out.

Why is Income Cover Important?

Financial Stability: It provides a steady income stream during recovery, helping you manage daily expenses, rent, mortgage payments, personal loans and other financial obligations.
Peace of Mind: Knowing that your income is protected allows you to focus on recovery without the added stress of financial worries.
Long-term Security: Income Cover can support you until you’re able to return to work, ensuring long-term financial security for you and your family.

How Does Income Cover Work?

Claim Process: If you’re ill or injured and can’t work, you can make a claim with required supporting documentation and your insurer will make regular claim payments to you.
Waiting Period: There’s typically a waiting period before benefits begin, ranging from 4 weeks to 2 years depending on your policy.
Benefit Payment: Once the waiting period is over, you’ll receive regular benefit payments, replacing a percentage of your lost income for a specified period of time being 2 years to age 65 years.

Who Needs Income Cover?

Individuals with financial obligations: Those with substantial financial commitments, such as mortgages, personal loans, or other debts, need to ensure these payments can be met even if their income is temporarily reduced.
Young Professionals: Early in their careers, young professionals might not have substantial savings to fall back on in case of an unexpected illness or injury.
Parents and Guardians: Parents need to secure their income to provide for their children’s needs, including education, healthcare, and daily living expenses.
Business Owners: Business owners can be integral to earning business income and if in the event this key person is sick or injured for a prolonged period of time this cover can provide monthly on-going payments to look after interim solutions including hiring a replacement temporarily.

Why Choose Sheehan Financial?

As locally owned, independent financial advisers here in Nelson, we offer:

Access to a wide range of providers: We work with numerous insurance companies to find the best coverage options for you.
Competitive premiums: Our independence allows us to compare different providers and offer you the most competitive rates available.
Personalized advice: We tailor our recommendations to your specific financial situation and needs.

Income Cover is an essential component of a robust financial plan, providing security and peace of mind in uncertain times. Sheehan Financial in Nelson, New Zealand, offers tailored, comprehensive policies to protect your income and ensure your financial stability. Don’t leave your financial future to chance —contact Sheehan Financial today to learn more about Income Cover and how it can benefit you.