Key Takeaways
A good income protection insurance adviser helps you work out how much of your income you actually need to protect, compares policy wording across insurers and stays with you if you ever need to claim. This guide covers how to check an adviser's licence in New Zealand, what to ask before you commit and what a sound advice process looks like.
- Anyone giving financial advice to New Zealand consumers must be licensed by the FMA or work under a licensed Financial Advice Provider.
- Ask how the adviser is paid. Commission, fees and conflicts of interest must be disclosed to you.
- Good advice starts with your budget, savings, leave and ACC entitlements, not with a product.
- Ask for the recommendation in writing, including the options considered and why they were set aside.
- Choose an adviser who will help at claim time and review your cover as your income changes.
What an income protection insurance adviser does
Income protection pays a monthly benefit if illness or injury stops you working, subject to the policy terms. An adviser's job is to match the detail of a policy to your situation: your income, essential costs, other support and the work you do. The aim is cover that pays out in the situations you are worried about, at a premium you can keep paying for years.
Working out your income gap
A useful first conversation covers what your household earns, which costs would continue if you stopped working and what support you already have. That includes savings, sick leave, a partner's income and any workplace insurance. ACC matters too, but only for accidents. ACC does not cover illness, so conditions such as cancer, heart disease and most mental health conditions are not covered by ACC. Our guide to ACC and income protection explains the gap in more detail.
Comparing policy wording across insurers
Income protection policies that look similar on price can respond very differently at claim time. An adviser compares the definitions of disability, the waiting and benefit periods, how other income is offset, and whether the benefit is set on an indemnity or agreed value basis. If you want to understand those features before you meet anyone, read our guide to how income protection cover works.
Helping at claim time
The value of advice often shows up years later, when you are unwell and dealing with forms, medical reports and income evidence. Ask any adviser what claims support they offer and how they would help if your claim is complex or disputed.
How to check an adviser's licence and credentials
The current regime began on 15 March 2021 and, since full licensing took effect on 16 March 2023, anyone giving regulated financial advice to retail clients in New Zealand must hold a Financial Advice Provider (FAP) licence from the Financial Markets Authority, or give advice on behalf of a licensed FAP. Checking this takes a few minutes and is worth doing before you share health or financial details.
Check the Financial Service Providers Register
Ask the adviser which licensed FAP they work under, then look up that provider and the adviser on the Financial Service Providers Register. You can see whether the provider holds a current licence and whether the adviser is registered as a financial adviser or works through an authorised body. The FMA explains how to check and choose a financial adviser on its website.
Understand the Code of Professional Conduct
Financial advisers must follow the Code of Professional Conduct for Financial Advice Services. The Code requires them to treat clients fairly, act with integrity, give advice that is suitable for you, make sure you understand the advice and have the competence and knowledge for the type of advice they give. Advisers must also put your interests first when giving advice.
Ask about their income protection experience
Income protection is one of the more technical types of personal insurance. Ask how often the adviser arranges this cover, whether they work with self-employed people or people with variable income and how they handle applicants with a health history. A confident adviser will explain policy terms in plain language and tell you where your situation is likely to cause underwriting questions.
Questions to ask before you choose an adviser
Asking the same questions of each adviser you speak to makes the comparison fair. The table below sets out the main ones and what a clear answer should cover.
| Question to ask | What a clear answer covers |
|---|---|
| Which licensed FAP do you work under? | The provider's name and how you can verify the licence on the register. |
| How are you paid? | Whether commission, a fee or both apply, and whether payment differs between insurers. |
| Which insurers do you compare? | The range of insurers considered and any limits on that range. |
| How will you factor in ACC and my other support? | How offsets, savings and leave shape the benefit amount and waiting period. |
| Will I get the recommendation in writing? | A written summary of the advice, the reasons and the trade-offs. |
| What happens if I need to claim? | The claims support offered and how to contact the adviser. |
How the adviser is paid
Many insurance advisers in New Zealand are paid by commission from the insurer, some charge a fee and some use both. None of these models is wrong, but you should know which applies. Advisers must disclose information about fees, commissions and any conflicts of interest, and explain how those conflicts are managed so your interests come first.
Which insurers they compare
Some advisers can recommend policies from several insurers, while others work with a smaller panel. Ask how many insurers they consider for income protection and why. A narrower range is not automatically a problem, but you should know about any limits before you rely on the advice.
What support continues after the policy starts
Your income, job and family will change over the life of the policy. Ask whether the adviser offers regular reviews, how they will contact you and what you should tell them when something changes, such as a pay rise, a new mortgage or a move to self-employment.
What a sound advice process looks like
A good advice process is structured and documented. You should be able to follow each step and see how your answers shaped the recommendation.
- Fact find. Your income, expenses, debts, savings, leave, existing cover, occupation and health history.
- Needs analysis. How large the income gap would be, how long you could manage without a payment and what ACC might cover for an accident.
- Recommendation. A written explanation of the recommended cover, the alternatives considered and the reasons for each trade-off.
- Application. Help completing the insurer's questions accurately, including your health and income details.
- Review and claims. Ongoing reviews and support if you need to claim.
Getting your disclosure right
Under current New Zealand law, you need to tell the insurer everything that could affect its decision to offer cover, not only what the application form asks. Getting this wrong can lead to a claim being declined or the policy being cancelled. The Contracts of Insurance Act 2024 will change this for consumer policies, replacing the broad duty with a duty to take reasonable care not to make a misrepresentation, but the FMA notes that the Act comes into force on 15 November 2027. Until then, an adviser should help you disclose fully and accurately.
Matching the benefit to your real needs
Insurers limit the monthly benefit to a share of your income, so the maximum available is not always the right amount. An adviser should test your essential costs against savings, a partner's income and leave, then show how the waiting period and benefit period change the premium. A longer waiting period lowers the premium but means relying on your own resources for longer.
Red flags when choosing an income protection adviser
Most advisers do a careful job, but a few warning signs are worth knowing. Be cautious if an adviser:
- Cannot tell you which licensed FAP they work under.
- Avoids questions about commission or fees.
- Recommends a policy before asking about your income, costs and health.
- Suggests leaving out health details or describing your job differently to lower the premium.
- Pushes you to replace existing cover without explaining what you could lose, such as cover for conditions that would now be excluded.
- Will not put the recommendation in writing.
Replacing an existing policy deserves extra care. A new insurer will assess your health again, so conditions that arose since you first took out cover may be excluded under a new policy. A good adviser explains the trade-off before you cancel anything.
How SHARE - The Advisory can help
SHARE - The Advisory gives advice as an authorised body under a licensed Financial Advice Provider. Our advisers look at your income, costs, savings and ACC position, compare income protection policies across insurers and explain the trade-offs in plain language. We also help clients through the claims process and review cover as life changes. Learn more about our income protection insurance advice or contact us to book a conversation.
Conclusion
Choosing an income protection insurance adviser in New Zealand comes down to three checks: the adviser is properly licensed, they are open about how they are paid and their process starts with your circumstances rather than a product. Ask the same questions of each adviser, get the recommendation in writing and make sure claims support is part of the service.
The right adviser will help you build cover that fits your budget today and keep that cover in line with your income as your work and family change. This article is general information only and is not personalised advice.
Frequently Asked Questions
How do I check if an insurance adviser is licensed in NZ?
Ask which Financial Advice Provider the adviser works under, then search for the provider and adviser on the Financial Service Providers Register. The register shows whether the provider holds a current FMA licence.
Do income protection advisers charge a fee?
Some do, but many insurance advisers are paid by commission from the insurer. Advisers must disclose how they are paid and any conflicts of interest, so ask before you start.
Should I use an adviser or buy income protection direct?
Buying direct can be quick, but you are comparing on your own. An adviser can compare definitions, offsets and waiting periods across insurers and can help with the application and any future claim.
What should I bring to my first meeting with an adviser?
Bring details of your income, regular expenses, debts, savings, sick leave and any existing insurance. If you are self-employed, recent financial statements or tax returns are useful.
Does ACC mean I do not need income protection?
No. ACC covers injuries from accidents but not illness, and weekly compensation is capped. Income protection can cover illness as well as injury, subject to the policy terms.