The short answer
Income protection in New Zealand is commonly priced at roughly 1% to 3% of the annual income you are insuring, though it can sit well outside that band. Someone insuring $80,000 of income might therefore see annual premiums somewhere in the region of $800 to $2,400 — with occupation, age, wait period and benefit period pushing it up or down substantially.
Unusually, the two biggest price levers are settings you choose rather than facts about you.
Last reviewed 2026-07-30
Why occupation matters here more than anywhere
Life insurance mostly cares whether you are alive. Income protection cares whether you can work — so what you do for a living moves the price hard. Insurers band occupations roughly from desk-based professional through to manual and high-risk trades, and the premium difference across those bands for the same age and income can be several times over.
It also affects the definition you can get. Professionals can more often obtain "own occupation" cover — it pays if you cannot do your job. Manual occupations are more often offered "any occupation" — it pays only if you cannot do any job you are reasonably suited to. That difference is worth more than the price difference.
The two levers you control
| Setting | Cheaper | Dearer | What you are trading |
|---|---|---|---|
| Wait period | 13, 26, 52 weeks | 4 weeks | Your own savings and leave do the early work |
| Benefit period | 2 years | To age 65 | Cover for the catastrophic long-term scenario |
| Structure | Indemnity | Agreed value | Certainty about what gets paid |
| Definition | Any occupation | Own occupation | Whether "unable to work" means your job or any job |
Insure the year that never ends, not the month you can already cover.
Tax treatment changes the real cost
Income protection is commonly structured so that either the premiums are deductible and the benefit is taxable, or the premiums are not deductible and the benefit is paid tax-free. Those two structures can look similar on a premium quote and produce quite different outcomes at claim time depending on your marginal rate.
This is a genuine accountant question. It is also the reason a headline premium comparison between two policies can be misleading if they are structured differently.
Bringing the premium down without gutting the cover
- Lengthen the wait period to match your actual runway — sick leave, annual leave and savings. Use the calculator to work out what that runway really is.
- Keep the benefit period as long as you can afford. This is the part doing the heavy lifting.
- Check whether your occupation is banded correctly — people who have moved from the tools into management are sometimes still rated as manual.
- If you hold mortgage protection as well, check you are not paying twice toward the same income cap.
- Re-test the market if you have stopped smoking or changed occupation.
Common follow-up questions
Is income protection worth the money?
The honest way to answer it is arithmetic rather than opinion: work out how many months your household could pay its bills with no income from you, and decide whether that number is acceptable. For a household with a mortgage and under six months of runway, income protection is usually the highest-value cover available — because ACC does not cover illness and illness is the most likely cause of a long absence.
Why is my quote so much higher than my colleague's?
Most often occupation banding, age, or a difference in the settings — a four-week wait against a thirteen-week wait, or own-occupation against any-occupation, will produce very different prices for otherwise identical people. Comparing income protection premiums without comparing wait period, benefit period, definition and structure is comparing nothing.
Does the premium go up each year?
Typically yes on stepped rates, with age. Some insurers offer level structures. Because income protection is the cover people most often hold for decades, the structure decision matters here as much as it does on life cover.
Keep reading
This page is general information about how insurance works in New Zealand. It is not regulated financial advice and it does not take your situation into account. For advice about your own cover, talk to a licensed financial adviser.