Jeremy Tauri: Is your job covered?

Have you arranged personal insurance?

You've probably got insurance for your house, contents and car. But have you insured yourself?

If you have a mortgage, it's quite likely that you have taken out life insurance, so that your family would not be left unable to service the mortgage if the worst happened to you.

But if you are a relatively young person, you have a much, much higher chance of being too sick to work for a period of time than you do of dying prematurely. If you don't have any income protection insurance, you could potentially be exposing yourself to significant financial hardship.

While ACC will step in if you have an accident, if your household earns more than about $20,000 a year, you are unlikely to get any assistance if you are off work through long-term sickness. You are 2.6 times more likely to be off work for six months or more due to a serious illness than because of an accident. Your income is likely your biggest asset, so it makes sense to protect it.

The Financial Services Council, which represents most of the country's biggest insurers, has done a lot of research in this area. It estimates only about one in seven Kiwis has income protection insurance.

But nearly 300 families in New Zealand have one of their main earners forced out of work due to sickness every week.

It's best to get professional advice about the type of cover you need. There are options, including things such as trauma and permanent disability cover.

Some policies pay a percentage of your income at the time you fell ill, while others pay out a predetermined set amount.

The right policy will depend on your age and circumstances. Income protection cover tends to be pricier than life insurance because it is more likely that the insurer is going to have to pay out. You may be able to reduce your premiums by opting for a policy with a longer stand-down period before it starts paying out - taking some of the risk yourself.