Income protection insurance, as its name suggests, is a way of guaranteeing your income when you are unable to earn it. Like any insurance, it’s the sort of claim you hope you’ll never have to make, but in an emergency, wouldn’t it be great to have one less thing to worry about?
What Lawyers should know about income protection
Income protection can replace your earnings up to a set amount. The usual maximum claim is 75%. There is usually a stand-down period set in your policy agreement before you can start receiving payments. How long you receive payments depends on your policy.
If you are off work because of an accident, your loss of earnings is generally covered by ACC. However this doesn’t apply to people who are off work because of illness, so this is where income protection insurance can help you.
Income protection insurance premium payments are generally tax-deductible. This applies whether you are self-employed or on salary.
When would Lawyers make an income protection claim?
If you are off work for a short period of time, your firm will probably cover your absence, through sick leave, annual leave, or other managed assistance. In that case, you may not need to make a claim at all.
You may not need to make a claim if you have savings or a spouse whose earnings can cover the immediate shortfall. However, as soon as you know that you will be off work for some time, get your claim in.
Most policies have a stand-down period. Take this into consideration when considering the timing of your claim request.
Why should Lawyers get income protection?
You are far more likely to be off work due to illness than for an accident. One in twenty New Zealanders suffer from some form of heart disease, not to mention the prevalence of cancer or strokes
Solicitors & lawyers work long hours in a demanding, high-pressure environment. The work is complex, clients can be difficult, and deadlines imperative. Being under stress is not conducive to recovery from an illness.
But most importantly, your ability to earn is your greatest asset. You’ve studied hard and worked hard to make it a valuable one. Why would you risk losing it?