Is ACC good Income Protection?
Many Kiwi workers assume ACC is good Income Protection and will keep them covered if anything happens and they are unable to work, forgetting that ACC only covers accidents. As around 1/3 of loss of income is related to injury, almost two out of three New Zealanders wouldn’t be covered by ACC if they get sick – and that’s scary!
ACC can be helpful – if you know the in and outs.
While we are pretty fortunate to have cover like ACC in place, over 66% of loss of income will not be covered so you need to consider having an Income Protection policy in place also. Keep in mind that under the guidelines of ACC not all injuries are created equally – they have very specific qualifying criteria and if your injury is believed to be degenerative or gradual in any way it’s likely you won’t be covered. And that’s where your Income Protection can save the day.
What about if you are self employed?
If you are self employed – especially if you are newly self employed – things start to get tricky very quickly. It can be hard to know just how much cover you will receive and it becomes more important than ever to know exactly what ACC plan you are on. Yes there are options! And I recommend you get familiar with the difference between ACC Cover Plus and ACC Cover Plus Extra. Remember – when you are self employed you don’t have the usual benefits such as sick leave or annual leave so it becomes more important than ever that you have certainty at claim time.
When you are newly self employed or have a much lower net income (after expenses) than your overall gross income, it can be very hard to verify the income you want covered. And lets face it, we tend to pay our ACC levies without a second thought as we know it’s compulsory for anyone who is self employed in New Zealand to do so. But if you don’t know what you’re paying for and if you’re not on the right plan, you may run in to trouble at claim time. It is definitely worth sitting down with an expert and getting some advice on your cover options, and how much cover you actually need.
Things to remember:
- ACC only covers injury – not illness.
- Qualifying criteria at claim time can vary – not all injuries are created equally.
- Things can get complicated if you are self employed – it pays to invest in an expert and make sure you are on the right ACC Plan for your situation. For more information on the ACC Plan options and how ACC Restructuring works for the self employed, have a look at our website.
Accident Cover under ACC can be fine, but you may still need to explore other Income Protection options to ensure you are covered in the event of an illness. The best way to make sure you have sufficient Income Protection is to talk with a Financial Adviser. With complex situations like this you’re better off getting set up correctly, right from the very start.
Contact Nicole Skewes at Lifestyle Cover for expert advice and peace of mind. At Lifestyle Cover we are all about “Insuring What Matters Most, Your Family, Health & Income”