You may have protected your car, your house and your contents with insurance, but what about the income that helps pay for them?

If your ability to earn was taken away tomorrow, how long would you be able to pay your rent or mortgage, your bills and your life expenses without money coming in? That is the gap income protection insurance is designed to help with.

According to a 2025 Financial Services Council (FSC) survey, over the past five years, one in seven households in New Zealand have experienced a serious illness resulting in an inability to work for three months or more. After just a few weeks, when sick leave and annual leave have run out, around “55% of households would be unable to pay all their expenses and maintain their lifestyle”, according to MoneyHub.

While we’re lucky in New Zealand to have the support of the ACC in cases related to accidental injury, there are some significant gaps in what the ACC covers.

Importantly, ACC doesn’t provide income assistance for those out of work due to illness. In these cases, people can and do get caught short without the safety net of income protection or large amounts of savings on which to rely. (In fact, data released in February suggests about a third of New Zealanders have less than $500 in their savings accounts.)

Whatever stage of your career you’re at, or if you’re running your own business, income protection cover or serious illness cover can have a huge impact on how comfortably you’re able to live through and recover from significant illness or injury.

It’s easy to value the tangible things in our lives – our car, house and contents – and that’s clear in how many of us insure these assets above all else. Car insurance covers repairing and replacing your vehicle, house insurance offers the same for your home, but your income is what pays for all of this, so when that’s lost suddenly, who pays?

Turns out, many of us don’t think about protecting intangible things – like our income – in the same way we think about insuring a car or home.

Ben Rose, head of insurance and financial services products at the New Zealand Automobile Association (AA), says the ability to earn is an asset and should be treated as such. “We don’t often think of our income as an asset,” says Rose. “But actually the work that you’ve done to get into the career that you’re in is all an investment.

“The career that you’re building, the income that you generate from that, that’s a real asset that you own, and if it was gone, would make quite a big difference.” Income protection insurance is one way people can help manage that risk.

According to a 2025 Financial Services Council (FSC) survey, New Zealanders were over six times more likely to have car insurance than income protection cover. In fact, the study found we are just as likely to insure our pets as we are our own income.

It’s a big but important mindset shift for people to realise the things we can’t see or touch are just as worth protecting as those we can. Income protection is designed to help replace part of your income if you cannot work due to illness or injury.

In some ways, income protection insurance is about protecting things we have worked for, including keeping up payments on the housing and quality of life that we are used to, says Rose.

“People will insure their house or their car, but their income is what pays for those.”

Just because a person isn’t working or earning doesn’t mean bills like rent or groceries go away. Income protection insurance is designed to replace part of your eligible income if illness or injury stops you from working, subject to the policy terms. It’s what the FSC calls a “financial safety net”.

While some people have the cushion of generous workplace sick leave or other support, for most, that’s not the reality. Those households need to think about how they would manage a long period without income. So in a world full of insurance options, how can you decide whether income protection is worth considering? Rose says it’s easy: if you rely on your income to meet everyday expenses, it’s worth considering.

“It may be relevant for people who would struggle to meet regular expenses if they were unable to work for a period of time,” he says. “People with dependents, rent or mortgage payments, or limited savings – they all may find it worthwhile to learn more about how income protection works.”

As the cost of living crisis continues to put pressure on household income, adding new insurances can feel low on the priority list.

Rose says AA Life Insurance has tried to ensure its straightforward income protection stays affordable amidst the rising costs of living, so people who rely on their income, no matter its size, can get useful financial support and peace of mind with income protection cover, easily.

“People think that products like this are really complicated to access,” says Rose.

“But you don’t have to go through an advisor or a broker. Many customers can get an online quote in minutes, and quotes are valid for 30 days, so you can have time to think about what’s right for you.”

If something were to happen to your ability to make an income, there are always a few options. But income protection insurance may help reduce some of the financial pressure while you recover, so you may not need to rely as heavily on savings, family support or debt, says Rose.

“Income protection is about protecting the thing that makes all the others possible.”

* AA Life Insurance provides information only and does not provide financial advice. Eligibility criteria, underwriting, policy terms, conditions, exclusions, waiting periods and limits apply. Consider the policy wording and whether the cover is right for your circumstances.