Income protection for Lawyers

Income protection for lawyers in NZ: what it covers and why it matters

There are over 18,000 lawyers holding a practising certificate in New Zealand as at 30 June 2026, the most the profession has ever recorded. Most are based in the main centres, with Auckland, Wellington and Canterbury home to around four in five New Zealand-based lawyers.

Lawyers in New Zealand also practise in very different ways:

• Around 5,900 are employees of law firms
• More than 5,300 work in-house
• And around 3,800 are approved to practise on their own account, including partners, sole practitioners and barristers sole.

Pay climbs steeply with experience.

Industry salary data reveals:

• Senior associates at around $160,000 to $175,000
• Partners at $240,000 or more

This places many lawyers in the top 10% of income earners in the country. Over a career, that earning power is likely to be one of the biggest financial assets a lawyer has.

Whether you’re a commercial lawyer in Auckland, a family lawyer in Hamilton or a barrister in Wellington, that income depends on you being well enough to practise.

The pressure is real, too: a three-year study found New Zealand lawyers reported higher levels of depression, anxiety and stress than their international counterparts and other professions.

Income protection insurance is designed to pay you a regular amount to replace part of your income if illness or injury stops you working. It’s worth considering at every stage of a legal career, whether you’re employed, in-house, a partner or running your own practice. It works alongside ACC and any cover through your employer, rather than replacing either.

In this article, we’ll go through what income protection is, how it works, and why it’s a relevant option for Lawyers in New Zealand.

What is income protection?

Income protection is insurance that could pay a monthly benefit if illness or injury means you can't work at all, or can only work reduced hours (what policies call total or partial disability).

It keeps money coming in while you recover, so the mortgage and household bills can still be paid while you're not billing. The policy wording on our insurance page sets out exactly how cover works, including what counts as total and partial disability.

For many lawyers, the income you'll earn over the rest of your career is your biggest financial asset. You spent years qualifying to earn it. Income protection is a way to insure it.

How much cover you have and how the policy works are set up when you take it out. This is where good advice counts, and a PPS accredited adviser can help you set up cover that fits.

Isn't professional indemnity insurance enough?

Typically, no. The two do different jobs. Professional indemnity insurance is there to protect you and your firm if a client claims they've lost out because of your legal work. It doesn't pay you anything if you can't work.

Income protection looks after your own income. If serious illness or injury keeps you from practicing, professional indemnity cover won't help with your living costs. It's easy to assume you're covered because your firm holds professional indemnity insurance, but it isn't designed for that.

Doesn't ACC cover me if I can't work?

Only if you're hurt in an accident. ACC covers personal injuries caused by accidents. It doesn't cover illness, sickness or conditions related to ageing. Mental health conditions generally aren't covered either, unless they're linked to an injury ACC already covers.

So if cancer, a heart attack or a mental health condition that isn't linked to an injury keeps you off work, ACC generally won't pay.

When ACC does cover you, weekly compensation is up to 80% of your earnings before the injury, up to a weekly maximum. If the injury didn't happen at work, there's no compensation for the first week.

ACC also works out compensation differently for self-employed people, so if you run your own practice it's worth checking what you would actually receive.

Do employed lawyers need their own income protection?

Some employers offer income protection as a staff benefit, which is a good start. It's worth knowing what that cover does before you rely on it.

Questions to ask about cover through your employer:

• How much would it pay, is there a cap, and does it keep up with what you earn now?

• How long would payments last?

• Does it cover illness as well as injury?

• What happens to it if you change firms or employers, or set up on your own?

Cover through an employer is usually part of your employment package, so it may end when you leave. A personal policy stays with you as your career moves.

Does it work differently for partners and sole practitioners?

Yes, in a couple of ways.

If you own or part-own a practice, your income may come as drawings or a share of profits, and it can move around from year to year. That affects how your cover should be set up.

Broadly, income protection comes in two styles. With agreed value cover, the monthly amount (your sum insured) is agreed when you take out the policy.

With loss of earnings cover, the amount is worked out, up to your sum insured, from what you were earning before you stopped work. With PPS Mutual, that's your best 12 months of earnings from the last three years, which helps if your income goes up and down.

Some policies combine the two. Which one makes sense depends on how steady your income is.

Practice owners also have a second question to think about: what happens to the firm if illness or injury keeps them from working.

PPS Mutual's Key Person Protector Cover is designed to help practices replace lost revenue or bring in a locum if a key person can't work because of illness or injury.

Where does PPS Mutual fit?

PPS Mutual is a life insurer built for professionals, including lawyers. It’s a mutual, ultimately owned by the Professional Provident Society Trust for the benefit of its members, and  owned and operated in New Zealand.

PPS Mutual's Professionals' Choice Income Protection Cover is designed for professionals and comes in agreed value, loss of earnings and combined versions. As a mutual, PPS allows members to share in its long-term financial success through its Profit Share Benefit.

You can get PPS cover through a PPS accredited adviser, who can also check whether you're eligible.

Frequently asked questions

Is income protection the same as professional indemnity insurance?

No. Professional indemnity insurance covers claims made against you or your firm over your legal work. Income protection pays you a monthly benefit to replace part of your income if illness or injury means you can't work, or can only work reduced hours. They protect against different things, so one doesn't replace the other.

Can I keep my income protection if I change firms?

If you own the policy and it covers you, it typically stays with you when you change firms, move in-house or start your own practice, as long as you keep paying the premiums. Cover provided through an employer's scheme can end when you leave, unless it has an option to continue it, so check its terms before you rely on it.

Can I get income protection as a sole practitioner or partner?

Yes. Self-employed lawyers and partners can hold income protection. Because income from a practice can change from year to year, the way the cover is set up matters. A PPS accredited adviser can explain the options and which approach fits your income and working arrangements.

Who can get cover with PPS Mutual?

PPS Mutual's insurance is designed for professionals who meet its eligibility criteria, including lawyers. Cover is also available to their spouses, dependent children and key business associates, pending eligibility. Membership is exclusively for professionals. A PPS accredited adviser can confirm whether you're eligible.

If you're a lawyer and want to know how income protection could work for you, get in touch to talk to a PPS accredited adviser.

Disclaimer

This article is general information only and is not financial advice. All PPS Mutual cover is subject to the applicable Cover Terms, conditions, exclusions and underwriting. For full details, please refer to the Cover Terms. Information is current as at [date of publication]. PPS Mutual cover is available through accredited, independent financial advisers. Please contact your adviser for further information.