Income Protection Wait Period Cost Calculator NZ

This calculator shows the trade-off in choosing a longer wait period on income protection insurance in New Zealand: the premium you save against the savings buffer you would need to cover the extra weeks before your cover kicks in. The wait period, sometimes called the stand-down, is how long you must be unable to work before the policy starts paying you. Choosing a longer wait period lowers your premium, because the insurer pays out less often and later, but it shifts more of the early risk onto you, since you have to fund your own living costs through those first weeks. The decision really comes down to your emergency savings: with a solid buffer you can comfortably self-fund a longer stand-down and pocket the premium saving, while with little put aside a shorter wait period buys faster support. You enter the premium for a shorter wait period and a longer one, the extra weeks the longer option adds, and your weekly income, and the calculator shows the annual premium you would save and the buffer you would need to cover the extra wait if you had to claim. Use it to match your wait period to your savings, and to see how many years of premium saving it would take to build that buffer. A guide only, not financial advice.

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$
$
$
$300
annual premium saved with the longer wait
Buffer needed$9,600
Years of saving to build it32 years

The buffer covers your income for the extra wait weeks if you claim. The longer wait pays off if you rarely claim and hold the buffer. A guide only, not advice.

How it works

The annual premium saving is the shorter-wait premium minus the longer-wait premium. The buffer needed is your weekly income times the extra wait weeks, the income you would have to self-fund before the longer-wait cover starts. Dividing the buffer by the annual saving shows how many years of premium saving it would take to accumulate that buffer.

Worked example

If a shorter wait costs 1,200 dollars and a longer wait 900 dollars, you save 300 dollars a year. The longer wait adds 8 weeks, so on a 1,200 dollar weekly income you would need a 9,600 dollar buffer, which the premium saving alone would take about 32 years to build, so the longer wait suits those who already have savings.

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Frequently asked questions

What is the wait period on income protection?

The wait period, or stand-down, is how long you must be off work before income protection starts paying. A longer wait period means a lower premium, because the insurer pays out less often and later, but you must cover those first weeks yourself.

How long a wait period should I choose?

It depends on your savings. If you have a healthy emergency fund that could cover several weeks or months of expenses, a longer wait period saves premium. With little buffer, a shorter wait period gives faster support but costs more.

How big a buffer do I need?

Enough to cover your income for the extra weeks of the longer wait period, since that is the gap before cover starts. This tool works out that buffer and the annual premium you save, so you can weigh one against the other.