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Income Protection Insurance FAQs

This page answers a range of questions about Disability Income Protection.


Am I eligible to apply for income protection insurance?

You are eligible to apply for Sovereign TotalCareMax Disability Income Protection if:

  • You are 16 to 55 years of age (or up to age 60 if you work in a clerical, managerial or professional job); and
  • You are a New Zealand citizen or a permanent resident or you hold a current New Zealand work permit or a long term New Zealand business visa.
Are all occupations eligible?

No. Most occupations are eligible, however some high-risk occupations are uninsurable due to the nature of these occupations and the risks they present from an insurance perspective. Some examples of occupations that are not eligible for Disability Income Protection cover include armed forces personnel, police, prison guards, firemen, coal miners, professional divers and pilots.

What if I already have income protection insurance?

If you already have income protection insurance with another insurer, and you intend to keep that policy, then you should think very carefully before applying for Sovereign TotalCareMax Disability Income Protection as well. The reason for this is that benefits paid to you under any other income replacement insurance policy will be offset (deducted from) any benefits payable under this policy. You could therefore be effectively paying twice for the same cover.


How much cover should I apply for?

We are not able to say how much Disability Income Protection cover you should apply for, as this website does not provide personalised advice. You need to determine that yourself, either independently or in combination with any advice which you might obtain.

What is a waiting period and how do I choose one?

A waiting period is the period of time between the date on which your illness commences (or your injury occurs), and the date on which your income protection benefits start. For example, if you injure yourself and you are unable to work and your waiting period is 4 weeks, then you will not start to receive benefits under your policy until 4 weeks after the date of your injury.

If you recover and return to work before the end of the waiting period, then you will not receive any benefits under the policy (as your income will have resumed). If you are still unable to work at the end of the waiting period then you will receive benefits until either, you return to work, or you reach the end of your benefit payment period.

You can choose a waiting period of 4, 8 or 13 weeks. The longer your waiting period, the lower your premiums. This gives you the flexibility to choose a waiting period which produces premiums to suit your budget. Ideally, when choosing a waiting period, you should factor in your sick leave entitlement (and any other savings that you would have available if you were unable to work), so that when this source of funds runs out your income protection benefits start.

Will I always receive the full benefit amount if I can’t work?

No, not always. Firstly, you will only receive an income protection benefit if you remain unable to work, or unable to work above 75% capacity, beyond the waiting period which you have chosen. If you are completely unable to work due to illness or injury beyond your chosen waiting period, and there are no offsets to your benefit (see What are benefit offsets, and how do they affect me? below), then you would qualify for the full income protection benefit stated on your policy. See also What is a partial disability benefit and when is it paid? below.

What are benefit offsets, and how do they affect me?

Benefit offsets are amounts which are deducted from your income protection benefit payments, due to the fact that you are already receiving (or are entitled to receive) those amounts from another source. These offsets consist of any other income protection benefits which you receive as a result of the same illness or injury, including ACC payments, and any earnings you receive from your employer or business, such as sick leave payments. For example, if your calculated income protection benefit is $5,000 per month, and you are receiving $1,000 per month from ACC for the same cause that is preventing you from working, then the $1,000 ACC payment is offset against your income protection benefit, and you will receive a benefit of $4,000 per month.

What is a partial disability benefit and when is it paid?

If you are unable to work due to illness or injury for a period of 2 weeks or more, and you return to work at less than 75% of full capacity, you can receive a partial income protection benefit when your chosen waiting period ends. The amount of your partial disability benefit is up to 75% of the difference between your pre-disability income and your post-disability income, less any benefit offsets. An important point (and a major benefit) to be aware of is that you don’t need to be completely unable to work for your chosen waiting period‒you just need to be completely unable to work for two weeks, and then be unable to work to 75% capacity or more beyond your chosen waiting period, in order to qualify for a partial disability benefit.

What if I become disabled again from the same cause?

If you become totally disabled from the same cause after you have returned to work and have stopped receiving an income protection benefit, your waiting period will be waived if your disability recurs within 6 months of your income protection benefit stopping. All claims resulting from the same or a related cause are considered to be the same claim for the purposes of the policy.

Am I still covered if I travel or work overseas?

Yes, you are. Regardless of where you travel in the world, the reason for your travel or for how long you are away, you will be covered. This means that you remain covered even if you decide to leave New Zealand to live or work overseas.

Can I reduce my cover after my policy has been issued?

Yes, you can. If your circumstances or your financial responsibilities change, you can reduce your Disability Income Protection cover at any time.

Will my cover expire at any particular age or date?

Yes, it will. Disability Income Protection cover expires at age 65.


For questions about our Disability Income Protection quotes, please see our Quote FAQs.

Application Process

When should I apply?

You should apply today. If you don’t, you might find that you don’t apply at all, and then when you need the cover it would be too late. What’s more, you should apply while you can still be readily accepted, and not run the risk of developing a medical condition which could result in an exclusion being added to your policy or cause your application to be declined.

Is it easy to apply for Disability Income Protection?

Yes, it’s very easy. Simply get a quote and apply online. It takes most people less than 20 minutes.

Is there a lot of paperwork?

There is usually no paperwork at all. You apply for cover entirely online, and your application can be processed and your policy issued without you having to complete any paper forms.

What sort of questions do I need to answer?

In addition to your name and contact details, the application form has questions about your residency, your occupation and activities, your income, your health, any other life or health insurance you might have, and payment details.

Will I need to undergo a medical examination or tests?

No medical examinations or tests are normally required. However, if you are requested to have either, then there would be no cost to you at all. In that event Sovereign’s HealthScreen service could be offered to you. This consists of a registered nurse visiting you at your home or office at a time which is convenient to you. It’s all very low key.

What happens after I submit my application?

As soon as you submit your application a confirmation email will be sent to you. The email will outline what happens next, and it will have contact details in the event that you wish to contact us while your application is being processed. We will keep you updated at each step, right through to the acceptance and issue of your policy.

How long will it take to process my application?

All applications undergo initial processing right away, and the majority are fully processed within a matter of days. If there are any details missing from your application, or if further information is needed, then that may extend the time required to process your application.


What are my payment options?

All premiums are paid directly to Sovereign. You can pay your premiums by any of the methods below:

  • Direct Debit from a New Zealand bank account;
  • Credit Card (Visa or MasterCard); or
  • Debit Card.

You can change your payment method at any time.

You can pay your premiums weekly, fortnightly, monthly or annually. If you pay your premiums weekly or fortnightly, you can choose which day of the week your premiums are deducted. If you pay monthly, you can choose which date your premiums are deducted each month. You change your payment frequency at any time.

You will be notified before your first premium will be deducted. In any event, your first premium will not be deducted until at least 10 days after your policy is issued.

Do I get a discount if I pay my premiums annually?

Yes, you do. If you pay your premiums annually you will receive a discount of approximately 4.8% on the total benefit cost (everything except the policy fee). This discount is automatically calculated when you get a quote and select an annual payment frequency.

What happens if I miss a premium payment?

Don’t panic. Your cover will not immediately stop if you happen to miss a premium payment. Your policy provides 31 days’ grace for any premium due. If you miss a premium payment you should contact Sovereign as soon as possible and make arrangements to pay the missed premium. If you do nothing, and the premium remains outstanding beyond the 31-day grace period, then Sovereign is entitled to cancel your policy by providing notice to you in writing.

Cash Bonus

How does the 25% Cash Bonus work?

As soon as your policy has been issued, an amount equal to 25% of your first full year’s premiums will be direct-credited to your nominated bank account as a Cash Bonus. The Cash Bonus is normally paid before your first premium is due. The Cash Bonus is a one-off payment which applies only in the first year of your policy.

What happens if I cancel my policy?

If you cancel your policy before you have paid the first 12 months’ premiums, then you must repay your Cash Bonus in full. If you cancel your policy after you have paid the first 12 months’ premiums, you are not required to repay your Cash Bonus.


Can I change my mind after I receive my policy?

Yes, you can. You may cancel your policy at any time.

All of our policies come with a 15-day free-look period. If, at any time within the first 15 days of receiving your policy, you do not wish to continue your cover (for whatever reason), you may cancel your policy and get a full refund of any premiums paid.

You may still cancel your policy at any time after this free-look period, but you will not receive a refund of any premiums paid.

Can Sovereign cancel my policy for any reason?

Sovereign may cancel your policy in any of the following situations:

  • If a premium remains unpaid for more than 31 days after the premium due date.
  • If you did not disclose all material information at the time at which you applied for cover, or if you made a statement in your application which was material and substantially incorrect and was made either fraudulently or within the previous three years.
  • If you, a life assured or anyone acting on your behalf, makes a claim under the policy that is false or fraudulent in any respect. Sovereign can also decline liability in respect of any claim made under the policy.

Policy Owner

Can I change the owner of my policy?

Yes, you can. You may change the owner of your policy at any time. All existing and any new policy owners must agree to the change. For example, you could change the policy owner from just yourself to joint ownership between yourself and your partner. In order to change the policy owner, simply complete a Change of Ownership Form.


How do I make a claim?

If you need to make a Disability Income Protection claim, please read our guide to making a claim.

Is any tax payable on any benefit received?

Yes. Ordinarily, benefits paid under this policy are assessable for income tax. Correspondingly, the associated premiums are ordinarily deductible expenditure for income tax purposes. You should obtain tax advice which is specific to your own circumstances in order to form a view on your tax position.

Are there any exclusions which would prevent a claim?

Yes, there are. No benefit is payable if any of the following directly or indirectly causes or contributes to a disability:

  • Deliberate or attempted self-harm by the insured;
  • The insured engaging in or being part of any conduct that is criminal;
  • Pregnancy or childbirth of the insured, unless the disability lasts for more than 90 days after the end of the pregnancy (in which case the waiting period starts from the 91st day); or
  • The insured not complying with treatment prescribed by an attending treatment provider.


Can I see the policy wording before I apply?

Of course you can. You can view or download a copy of the Disability Income Protection Policy wording at any time. If you have any questions at all about the policy wording, please contact us.

What is the Guaranteed Enhancement Benefit?

All Sovereign TotalCareMax policies contain a Guaranteed Enhancement Benefit. This means that if at any time in the future, Sovereign makes a change to the standard policy wording, and that change would be favourable to you, then the enhanced section will automatically be applied to your policy, subject to the conditions specified in your policy.


Will my policy ever have a cash value?

No. The premiums for your policy provide risk cover only, and any other special benefits as set out in your policy. Your policy does not acquire any surrender or cash value at any time.

How financially strong is Sovereign?

Sovereign is the largest life insurer in New Zealand. Sovereign has an A+ (Superior) financial strength rating from international credit-rating agency A.M. Best. There is no life insurance company in New Zealand which has a higher financial strength rating. View the A.M. Best Company rating scale.

Important Information

  • The above provides a summary only of the benefits, terms and conditions of the policy. Please refer to the policy wording, including the policy appendix and schedule, for full details of the policy benefits and the terms and conditions under which they are provided.