New Zealand Income Protection Calculator
Estimate NZ income protection, Mortgage Repayment Cover and Household Expense Cover premiums. Includes ACC levy offset, 2-year vs to-age-65 benefit periods, and tax treatment.
Your Profile
Estimated Benefit
Monthly Benefit (Gross)
NZ$5,938
Estimated after-tax on claim: NZ$4,275/mo
Annual Premium
NZ$1,923
Monthly Premium
NZ$160
ACC Interaction
ACC offset applied: ACC covers earnings loss from ACCIDENT at up to 80% of pre-injury earnings, capped at NZ$141,847 of claimable income (2026 threshold). Your private IP pays ONLY for ILLNESS claims, OR tops up ACC for injury claims where ACC's 80% falls short. This reduces premium ~8-10% vs a standalone IP that duplicates injury cover.
Tax Treatment
Salaried / PAYE earner: income-protection premium is NOT tax-deductible from your personal income (no Section DA deduction for employment income). In return, the benefit paid on claim is entirely TAX-FREE for pure indemnity-style IP, and fully taxable for agreed-value policies. Most 2025+ NZ IP is indemnity — check your policy schedule.
Product Notes
Income Protection (IP): monthly benefit while you are unable to work in your own occupation due to illness or injury. Typically 55-75% of pre-tax income, to age 65. Gold standard is "own occupation, indemnity, to-age-65" from AIA / Fidelity Life / Partners Life. Best for professionals earning $80k+.
ACC vs income protection — the critical gap
ACC covers ACCIDENT-only loss of earnings at up to 80% of pre-injury income, capped at NZ$141,847 of claimable earnings (2026). It does NOT cover illness. If you're diagnosed with cancer, heart disease, long-COVID, or severe mental illness, your income replacement defaults to Jobseeker Support at around NZ$376/week — a fraction of most Kiwi salaries. Private income protection fills this illness-shaped gap.
IP vs Mortgage Repayment Cover vs Household Expense Cover
Income Protection (IP): monthly benefit while unable to work in your own occupation — 55-75% of gross income, typically to age 65. Mortgage Repayment Cover (MRC): pays your mortgage payment (up to ~115% of it) — cheaper but narrower. Household Expense Cover (HEC): fixed weekly benefit regardless of prior earnings — ideal for stay-at-home partners or variable-income self-employed.
Tax: salaried vs self-employed
For PAYE EMPLOYEES: personal IP premium is not deductible; indemnity benefit is TAX-FREE on claim. For SELF-EMPLOYED / contractors: premium is deductible as a business expense (Section DA); benefit is TAXABLE on claim. Most 2025+ NZ IP is indemnity-style — check your policy schedule.
Benefit period: 2-year vs to-age-65
To-age-65 is the gold standard — covers catastrophic long-tail disability (MS, cancer recurrence, severe mental illness). A 2-year cap cuts premium ~45% but exposes you exactly when serious long-term conditions bite hardest. Only choose 2-year if budget forces it AND you have other long-term assets.
Common questions about Income Protection
Why do I need income protection if I have ACC?+
ACC covers earnings loss from ACCIDENT only — up to 80% of pre-injury earnings capped at NZ$141,847 of claimable income for 2026. It does NOT cover illness: cancer, heart disease, mental health, chronic back pain. If you're diagnosed with a serious illness, your replacement income comes from Jobseeker Support at around NZ$376/week — a fraction of most salaries. Private income protection fills this illness-shaped gap.
IP vs Mortgage Repayment Cover vs Household Expense Cover — what's the difference?+
Income Protection (IP) replaces 55-75% of gross income to age 65, taxable or tax-free depending on structure. Mortgage Repayment Cover (MRC) pays your actual mortgage payment (up to ~115% of it) — cheaper but narrower. Household Expense Cover (HEC) pays a fixed weekly benefit regardless of past earnings, ideal for stay-at-home partners or income-variable self-employed. Most households combine IP on the primary earner with HEC on the partner.
Is income protection premium tax-deductible in New Zealand?+
For salaried PAYE earners, NO — personal IP premium is not deductible, but the benefit paid on claim is TAX-FREE (indemnity-style IP). For self-employed or contractors, premium IS deductible as a business expense under Section DA of the Income Tax Act 2007, and the benefit paid is then TAXABLE at marginal rates (28-39%). Check your policy schedule to confirm indemnity vs agreed value, as this changes the treatment.
Should I choose a 2-year benefit period or to-age-65?+
To-age-65 is the gold standard — it's what IP is actually for: catastrophic long-tail disability like MS, cancer recurrence, severe mental illness. A 2-year benefit period cuts premium roughly 45% but leaves you exposed exactly when serious long-term conditions bite hardest (beyond the 2-year mark). Only choose a 2-year cap if you genuinely cannot afford to-age-65 and have other long-term assets, such as a DI rider on a group scheme.
What waiting period (stand-down) should I choose?+
Common options: 4, 8, 13, 26 or 52 weeks. 13 weeks is the NZ default — matches most employer sick-leave entitlements (10 days statutory plus discretionary top-up) and a 3-month emergency fund. Shorter waits (4 or 8 weeks) raise premium 25-55%. Extending to 26 weeks cuts premium about 25% and is suitable if you have 6+ months emergency savings. Longer waits align incentives and avoid short-term claims churn.
How does ACC interact with private income protection?+
For injury claims, ACC pays first — up to 80% of pre-injury earnings (capped at NZ$141,847 of claimable income in 2026). Most modern NZ income protection policies include an "ACC offset" clause: the insurer only tops up the gap between ACC and your policy benefit, or pays in full for illness-only claims. Policies with this offset are 8-10% cheaper. High earners above the ACC cap benefit most, as ACC doesn't insure income above that ceiling.