Income insurance allows you to protect a percentage of your income in the event you become ill and are unable to work. The insurer will make monthly payments of up to 75% of your pre-disability income until you can return to work, or your payment period ends. There are three important things to keep in mind:
Your claim payments are based on your a pre-disability income. This typically means your income over any consecutive 12 month period in the last three years.
Your claim payments cannot be more than the amount you have insured. Even if your income at the time you are disabled has increased you will still only receive the amount you have insured.
The claim payments that you receive are taxed as income by the IRD (your premiums are tax deductible).
It is important to check your cover amount regularly and increase or decrease it with changes in your income.
Quotes from AMP, AXA, AIG, Asteron, Tower, ING,