Income protection gap calculator

ACC covers accidents, not illness. This works out what your household would be short each month if illness stopped you working, and how long your savings would hold out.

Step 1: your income

Gross salary, wages or drawings from your own work.

Leave this blank and we estimate it from your gross income using PAYE and the ACC earners' levy. Enter your real figure if KiwiSaver or a student loan comes out of your pay.

My employment type is:

The statutory minimum in New Zealand is 10 days a year, and unused days carry over to a maximum of 20 days. Ten days is about 2 weeks.

A partner's take-home pay, rent or any other income that keeps arriving if you stop working. Leave at $0 if there is none.

Step 2: essential monthly outgoings

Food, power, rates, insurance, transport, phone and internet. Leave out anything you would stop paying.

Each child adds $500 a month to the essential outgoings above.

Step 3: what you already have

Cash you could actually get to without a penalty. Term deposits locked for a year and KiwiSaver do not count.

Income protection or mortgage repayment cover already in force. Check the monthly benefit on your policy schedule, not the premium.

Waiting period I am considering:

How long you fund yourself before the first payment arrives. Change this and watch the bridge below move.

Benefit period I am considering:

How long payments would continue once they start.

General information only. This calculator does not give personalised financial advice and does not recommend a product. It sizes an indicative monthly cover need using simplified assumptions, and it never estimates a premium, what cover costs is set by an insurer at underwriting, and no figure on this page is a quote. Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931).

How the income protection gap calculator works

This calculator sizes the monthly income gap a New Zealand household would carry if the earner stopped working, and splits it by cause, because in New Zealand the cause decides whether anything arrives. An accident triggers ACC weekly compensation at 80% of liable earnings; an illness triggers nothing from ACC at all, and that illness gap is what income protection insurance exists to fill.

Methodology: how the numbers are produced

The calculation runs in six steps, entirely in your browser, and every figure is derived from what you typed rather than from any data held about you. Nothing you enter is transmitted anywhere.

• Step 1, essential monthly outgoings. Your mortgage or rent, plus your other essential monthly costs, plus $500 a month for each dependent child. That total is the monthly bill the household has to meet whether or not you are earning.
• Step 2, take-home pay. If you did not enter your own figure, gross income is reduced by PAYE on the New Zealand brackets and by the ACC earners’ levy on earnings up to the maximum liable amount, then divided by twelve. Your own figure always overrides the derived one.
• Step 3, the accident scenario. ACC weekly compensation is 80% of your liable weekly earnings, subject to both the maximum liable earnings figure and the maximum weekly compensation cap for the current ACC year. Because ACC weekly compensation is taxable, PAYE is deducted before the figure is compared with your outgoings, comparing a gross ACC payment against net expenses would overstate what the household actually has.
• Step 4, the illness scenario. ACC contributes zero. The only income left is whatever other household income you entered, so the gap is your essential outgoings less that income. This is the headline number.
• Step 5, the waiting-period bridge. Employer sick leave is converted to months at 4.33 weeks per month and valued at your take-home rate, then added to your accessible savings. That pot is divided by the monthly illness gap to give a runway in months, and the runway is compared against each waiting period on offer.
• Step 6, sizing a benefit. The indicative monthly benefit is your illness gap, capped at 75% of gross income and at the insurer annual limit, less any cover you already hold. Where the gap is larger than that ceiling, the remainder is reported as still uncovered rather than hidden.

No premium, price or cost is calculated at any point. These tools size a cover need. What a policy costs is decided by an insurer after underwriting your age, health, occupation, smoker status and the waiting and benefit periods you choose, and two people with an identical gap are routinely offered very different terms.

Why the illness column is so much worse

ACC covers personal injury, not sickness, so cancer, heart disease, stroke, multiple sclerosis and mental-health conditions produce no ACC weekly compensation for a New Zealander. That single boundary is why the illness gap in your result is typically several times the accident gap: in the accident case the household still has 80% of liable earnings arriving, and in the illness case it has nothing from the person who stopped earning.

• Employer sick leave is the only automatic buffer for illness, and the statutory minimum in New Zealand is 10 days a year, accruing to a maximum of 20 days, days, not months.
• Self-employed people and contractors have no employer sick leave at all, which the calculator reflects by setting that runway to zero for those employment types.
• ACC weekly compensation stops when you are fit to work; an income protection benefit stops at the end of the benefit period on the policy.
• Most income protection policies offset any ACC entitlement, so an accident does not produce two full payments.

Choosing a waiting period and a benefit period

The waiting period is how long you fund yourself before the first payment; the benefit period is how long payments continue. Match the waiting period to the runway this calculator gives you: if the tool says your savings and sick leave run out after four months, a six-month waiting period is not a saving, it is two uninsured months. Benefit period is the opposite trade-off, a two-year benefit period asks less of you up front, but the conditions most likely to end a career last a great deal longer than two years.

The assumptions behind the numbers

The tax and ACC arithmetic uses the published New Zealand rates held in this tool for the current ACC year, and the insurance side uses fixed planning assumptions. All of them are listed here so you can see exactly what the result is built from.

• PAYE is calculated on the New Zealand brackets of 10.5% to $15,600, 17.5% to $53,500, 30% to $78,100, 33% to $180,000 and 39% above that. No independent earner tax credit, KiwiSaver contribution or student loan repayment is modelled.
• The ACC earners’ levy and the maximum liable earnings figure are read from the rate set for the current ACC year, which runs 1 April to 31 March.
• ACC weekly compensation is 80% of liable earnings and is capped both by maximum liable earnings and by the maximum weekly compensation figure for the year. It is then taxed, because ACC weekly compensation is taxable income.
• An income protection benefit is assumed to be available up to 75% of gross income, subject to an insurer annual maximum.
• Each dependent child adds $500 a month to the household’s essential outgoings.
• Employer sick leave converts to months at 4.33 weeks per month, is paid at your normal take-home rate, and counts only for the employed option.
• Savings and sick pay are treated as one pot of cash and drawn down evenly against the monthly gap.
• Other household income is assumed to continue unchanged. In practice a partner often reduces their hours to provide care.

What this calculator cannot tell you

• It cannot tell you what cover would cost. No premium is calculated and no figure on this page is a quote.
• It does not model inflation, investment returns, a KiwiSaver hardship withdrawal, Work and Income support or a Community Services Card entitlement.
• It does not model tax on an income protection benefit. Whether a benefit is taxable depends on how the policy is structured; confirm yours with an accountant.
• It does not model the stand-down before ACC weekly compensation begins. For a non-work injury ACC generally pays from the eighth day; for a work injury the employer covers the first week.
• It cannot read your policy. Indemnity and agreed-value policies verify income at different points, and occupation definitions decide whether you are assessed against your own job or any job you could reasonably do. Those definitions decide claims, and this calculator has no view of them.

Common questions

Does ACC cover you if you are sick in New Zealand?

No. ACC covers personal injury, including accidents at home, at work and on the road, but it does not pay weekly compensation for illness. A New Zealander diagnosed with cancer, recovering from a stroke or unable to work through a mental-health condition has no ACC entitlement, which is the gap income protection insurance is designed to fill.

How much of my income does ACC replace?

ACC weekly compensation is 80% of your liable pre-injury earnings, subject to a maximum liable earnings figure and a maximum weekly payment that both change each ACC year. Above that ceiling the effective replacement rate falls below 80%, which is why higher earners often find the accident column short as well. The payment is taxable, so what lands in the account is less again.

How much income protection cover can I get?

New Zealand insurers commonly cap the benefit at around 75% of gross income, and this calculator uses that figure. The limit exists so that being off work is never better paid than working. Agreed-value and indemnity policies verify that income at different points, at application or at claim, which matters a great deal for self-employed people with variable earnings.

Is income protection worth it if I already have ACC?

ACC and income protection cover different causes rather than duplicating each other. ACC handles injury at 80% of liable earnings; illness sits entirely outside it. A household relying on ACC alone is therefore carrying every non-accidental reason for stopping work itself, which is the half of the risk this calculator puts a number on. Most policies also offset any ACC entitlement, so there is no double payment.

How long should my waiting period be?

Set it to the runway you can genuinely fund. This calculator works that runway out from the savings and sick leave you entered, then shows what each waiting period on offer would leave uncovered. Longer waiting periods ask less of an insurer and therefore cost less, but only pick one your own money actually reaches.

Is an income protection payout taxable in New Zealand?

Income protection benefits are generally taxable in New Zealand when the policy is written to replace income and the premiums are deductible, which is why benefits are usually quoted against gross income. Some policies are structured so premiums are not deductible and benefits are not taxed. Confirm which structure you are looking at, because it changes the benefit you actually receive.

Sources

• ACC, Calculating weekly compensation for employees: “ACC usually pays up to 80% of the income you earned before your injury”, before tax and deductions (retrieved 18 August 2026).
• ACC, Calculating your levies: maximum liable income $152,790 for the year starting 1 April 2025 and $156,641 for the year starting 1 April 2026 (retrieved 18 August 2026).
• ACC, Injuries we don’t cover: illness, sickness and conditions related to ageing sit outside the scheme (retrieved 18 August 2026).
• Inland Revenue, ACC earners’ levy rates (retrieved 18 August 2026).

Related calculators

• ACC gap calculator, the same ACC rates, focused on what ACC does and does not pay.

• Life insurance calculator

  , sizes a lump sum rather than a monthly benefit.
• TPD calculator, covers the case where you never return to work at all.

Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance, Free Will.