AIA Income Protection Insurance - a review

AIA NZ - a brief company overview

Helping make New Zealand “one of the healthiest and best-protected nations in the world.”

The AIA Group began selling insurance in 1919 - over a hundred years ago - in Shanghai, China. Expanding into the New Zealand market in 1981, AIA NZ enjoyed rapid, constant growth and can now count more than 800,000 Kiwi policyholders. AIA NZ paid out 93% of claims in 2023.

Backed by the Asia-Pacific AIA Group, one of the largest insurers in the world, AIA NZ knows that good health is invaluable. The company believes in “contributing to the wellbeing of people in every community”, and encourages policyholders to take charge of their own health, too.

What is income protection insurance?

Income protection insurance provides regular monthly payments if you suffer an illness or injury that prevents you from working temporarily or permanently. It also offers cover if your injury or disability forces you to switch occupations. 

You'll receive your monthly payments for the duration of the benefit period elected when you purchased the policy. With AIA’s income protection plans, this period could be one year, two years, five years, or until age 65 or 70.

Think of income protection as a worthwhile investment in protecting your finances so that you can meet your regular monetary commitments. It can also help pay for the additional expenses incurred due to your injury or illness, such as rehabilitation, home care, healthcare, medications, and specialist consultations.

Additionally, your income protection premiums may be tax deductible, and the benefit payments you receive may be taxable. 

Note: ACC (Accident Compensation Corporation) in New Zealand assists with accidents and injuries but doesn't cover disabilities due to sickness, or long-term illnesses. 

AIA Living Income Protection vs Mortgage and Income Protection

AIA offers two income protection plans: Living Income Protection and Mortgage and Income Protection. Talk to a Policywise adviser for help in comparing quotes and plans from multiple insurers. Policywise can also answer all your questions about income protection cover with pre-existing conditions, and any other concerns, 

In the meantime, let’s take a closer look at AIA’s Income Protection plans:

1. AIA LIVING INCOME PROTECTION

With AIA Living Income Protection, you have three options on how your monthly benefit will be calculated :

• Agreed Value: Your income replacement is based on the agreed proportion of your income set at the policy's inception. 
• Indemnity: Your income replacement is calculated on a percentage of your pre-disability income.
• Loss of Earnings: At claim time, you can choose whether your benefits are calculated based on agreed value or indemnity - whichever is higher. This option is particularly beneficial if your income fluctuates.

2. AIA LIVING MORTGAGE AND INCOME PROTECTION (MIP)

AIA’s Mortgage and Income Protection (MIP) calculates your monthly payments in two ways; either up to 115% of your mortgage payments or 45% of your total income. 

In case of accidental injuries, receiving ACC cover won't reduce your MIP payments.

AIA Income Protection: Features and benefits

HERE’S AN OVERVIEW OF WHAT’S INCLUDED:

• Worldwide cover

You are insured whether you're at home, travelling, or living abroad.

• Total Disability Income Benefit

You'll get a monthly payment after the waiting period ends, and it'll continue until you're no longer completely disabled or until your policy term ends.

• Partial Disability Income Benefit

If you become totally or partially disabled and work 75% fewer hours or earn 75% less than you used to, you'll receive a benefit payment at the end of each month. 

• Partial Disability Bridging Benefit

If you switch from a Total Disability to a Partial Disability Benefit, you'll receive a one-time payment equivalent to a third of your final total disability benefit.

• Waiting Period Option

Depending on your chosen plan, you can opt for a waiting time of 2, 4, 8, 13, 26, 52, or 104 weeks. If your chosen waiting time is 26, 52, or 104 weeks, in certain situations, you can shorten it without submitting medical proof. 

• Recurrent Disablement Benefit

If your disability recurs within a year due to the same or a related illness or injury, AIA may waive your waiting period.

• Back to Work Benefit

You'll get a one-time payment worth three times your monthly benefit if you go back to work after claiming for more than 12 (but less than 24) consecutive months.

• Vocational Assistance

This benefit helps cover the cost of a job training program approved by AIA if you can't resume your previous occupation because of your disability and need to retrain.

• Home Modification & Equipment Expense Benefit

In case of total disability, AIA can pay you up to 12 times your monthly benefit to help fund necessary special equipment or changes to your home.

• Bed Confinement Benefit

If you’re unable to work, confined to bed, and under the care of a registered medical practitioner for more than three days, this benefit offers you daily financial support.

• Pregnancy Premium Waiver

This provides a premium waiver for six consecutive months between your second trimester and six months after your pregnancy. You can still file a claim during this premium waiver period.

• Childcare Support Benefit

If you're totally or partially disabled and have children under 14, AIA may reimburse some of the costs of extra childcare support.

• Home Care Benefit

This gives extra funding to help pay for a carer (whether a professional or a family caregiver) for up to six months. The payment is made after rendering the service and goes to the caregiver. This option is only available under AIA Living Income Protection.

Please Note: Terms and conditions, as well as exclusions, apply to all AIA products. It's important to review your policy carefully to understand the specific terms of cover, benefits, and any limitations. This ensures that you have a clear understanding of the protection provided by each product. If you have any questions or would like some help finding the right policy for you, book a callback with a Policywise adviser; it's fast and free.

AIA NZ offers more ways to strengthen your cover 

• AIA Life Insurance: Ensures your loved ones receive financial protection in case of your unexpected passing. It provides a lump sum payment to support your family, settle debts, and cover living expenses.
• AIA Trauma Insurance: Offers a lump sum payment upon critical illness diagnosis, providing immediate financial aid for medical needs and lifestyle adjustments during recovery.
• AIA Health Insurance: Offers comprehensive cover for medical expenses, including hospitalisation, surgeries, consultations, and prescribed medications.
• AIA Total Permanent Disablement Insurance: Offers financial support in the event of permanent disability, providing a lump sum payment to cover ongoing expenses, medical care, and lifestyle adjustments.
• AIA Group Insurance: AIA offers easily adaptable solutions with cost-effective pricing to suit your company's needs, whether your business is small, with just 10 employees, or large, with 10,000.
• AIA Business & Rural Insurance: Protects businesses and rural enterprises against various risks, including property damage, business interruption, liability, and other unforeseen challenges.

Do you need AIA Income Protection Insurance in New Zealand?

Income protection insurance in New Zealand provides vital support when unforeseen events, like an injury, disability, or illness, impede your ability to work. This cover ensures continuity in meeting your financial commitments and safeguards your quality of life during challenging times. 

While New Zealand’s ACC will cover you for accidental injury, it does not offer income replacement cover for total or permanent disability due to illness. 

Here's why income protection insurance is essential: 

1. 1. Financial security: Of 2.8 million employed Kiwis in the March 2022 quarter, 44,200 were away from work for a full week because of sickness, illness, or injury. Various AIA policies, such as Income Protection, Trauma, Total Permanent Disability, and Health Cover can provide a strong financial backup for your family if you need to stop working temporarily or permanently.
   2. Debt protection: Home loan rates in New Zealand have been volatile since Covid-19 struck in 2020, rising from lows near 2% to more than 7%. AIA’s Mortgage and Income Protection and Critical Illness Cover can help pay debts, rents, mortgages, and loans, easing the financial burden.
   3. Income replacement: The cost of living in New Zealand rose by 7% in the 12 months to the December 2023 quarter. AIA’s Income Protection, Trauma, Disability, or Life Cover can help replace the financial input of the insured, enabling your family to maintain a quality of life and keep paying the bills.
   4. Education support: The costs of educating your child at tertiary level in New Zealand can range from $20,000 to $40,000+ per year. AIA’s Income Protection, Life, or Trauma Cover ensures your children's education remains uninterrupted, no matter what.
   5. Peace of mind: From June 2022 to May 2023, Kiwis sustained approximately 35,805 injuries resulting in more than a week away from work. Knowing you and your loved ones are financially secure while you are off work offers invaluable peace of mind.

Policywise: Your trusted insurance adviser

Policywise is a 100% free service which tells you which health, life, and disability insurance provider best fits your needs. We offer fast, comprehensive, and easy-to-understand comparisons of all leading providers, and a simple summary clearly recommending which insurer is best for your situation.

Not all insurance policies are the same. Policywise can help you sort out the duds, avoid the lemons, understand the fine print and exclusions, and get the right insurance for you and your family.

We make the important decision of where to buy your insurance super easy. We’ll answer your questions, provide experienced advice, quotes, and comparisons, and manage all the back and forth throughout the application process. Taking out your cover through us means you'll have our lifetime support and claims advocacy, and we'll help you negotiate a positive outcome at claim time. We can also take care of lodging any claims on your behalf and back you up if the going gets tough.

Check out the reviews on our homepage for how other New Zealanders have found our service, because now is the time to get your income protection insurance sorted. Give your family or someone you love the most outstanding financial support possible. Book a 5-minute callback with Policywise today; our service is fast and free.