Taking a lead from a colleague on blog questions, I've talked extensively on what is income protection, how it works and how to apply it to your situation. What I haven't explained is what it is likely to cost you.

Taking into account that everyone has a different situation, occupations, levels of income, medical history and available financial resources I am going to football the averages for you.

Today in New Zealand the average gross taxable income for earners is about $55,000. I'm going to use this as my base income to establish the cover level using a net of tax, agreed value approach.

This means we can insure a maximum of 62.5% of your gross income. Which gives us an annual benefit of $34,375 or $2,864 per month in the hand. In order to get this cover we would have to prove the income at or above $55,000 with pay-slips if employed or 2 years of annual accounts if self-employed (over 20-25% shareholding).

So what do the monthly premiums look like?

	Gender
Age	Male	Female
20	$42.44	$50.69
25	$39.70	$50.29
30	$42.46	$59.09
35	$45.39	$67.70
40	$57.21	$92.58
45	$80.79	$135.56
50	$123.93	$207.38
55	$192.70	$309.40

This is assuming standard non-smoking premium rates on a 13 week wait, paid until retirement, with retirement savings protection and an administrative occupation, which is what we most often seem to cover.

Premiums for professions like doctors, lawyers and accountants will be slightly lower with trade occupations more expensive. With smoking rates, we tend to find these are about 20% more than non-smoking premiums sometimes higher depending on provider.

As you can see there is a clear distinction between male and female rates. This is due to the direct claims experience. The ladies tend to be proactive about their health and end up with more disability claims while they deal with things, than the blokes are.

If you look at life cover premiums it is the reverse, where the less proactive approach to health by the blokes, results in higher death claims. Blokes, make a point of getting your health checked and deal with medical things quickly, the stats suggest you will live longer.

Once we have a clearer understanding of your situation we can refine things further.

Do we need to consider self-employed incomes and potential ACC savings?

Does your income fluctuate, would an expenses approach be better for you?

Do you have a mortgage? Investment or own home, it matters and there are different approaches because of this situation.

Now that you know the premiums are not as scary as you might have thought, get in touch with us and we can refine this to your situation so you have a clear understanding of what your income will cost to protect.

If you have any doubt about what your risk is, grab a calculator and add this up.

70 - your current age X your annual income = . This is your future earnings that is at risk if you are disabled long term.

Age 35, average income adds up like this 70-35x55000= $1,925,000 of income at risk. Get in touch and make sure you are not another statistic.

The rates quoted are current as at July 2014, they are from a single insurance provider and may change after medical and financial assesment of your situation for this level of coverage and will be different with another insurance provider.

The information is only intended to be of a general nature and should not be relied upon in any part without obtaining full details of the products and services by contacting Willowgrove Consulting Limited. All product and service details, terms, conditions and other information are subject to change at anytime without notice. Terms, conditions and fees apply to the various products and services and are available on request. A disclosure document will be provided to you on request free of charge.