Here in New Zealand, we’re lucky enough to get compensated by ACC for injuries that happen anywhere – on the road, while working, at home or while practising sports. But as great as this system is, it also has its limits.

If you’re relying on ACC for comprehensive income protection, here are some key things to know.

What ACC covers

ACC is designed to cover everyone in New Zealand who is injured in an accident, no matter if they are citizens, residents or visitors, self-employed or regular employees, children or retirees. And it does a good job at footing the bill for some recovery costs, like physiotherapy treatment and fees. Plus, if you’re off work due to a coverable injury, ACC may pay you as much as 80 per cent of your taxable (gross) income, up to a weekly maximum of $2,066.58 (at the time of this writing).

What ACC doesn’t cover

If your injury or condition isn’t the result of an accident, ACC won’t cover it. Think about illnesses and contagious diseases, age-related conditions like arthritis, or even emotional issues like stress (unless linked to an ACC-coverable injury).

What would happen if you were off work due to any of these scenarios? Would you need to use your emergency funds to meet your expenses?

How long does ACC cover you for?

Even if your injury is covered, the ACC would expect you to return to the workforce as soon as you’re well enough – either in your pre-injury work or in an ‘alternative suitable role’, meaning a role you’re reasonably qualified to do.

So, what if your post-injury capabilities made it impossible for you to return to your job, and you needed to settle for a lower-paid role in the same industry? In that case, ACC may still require you to take on the position and will stop making payments.

How Income Protection Insurance can help

Many New Zealanders believe that if something ‘bad’ happens to them, ACC will step in. However, as we’ve just seen, there’s a lot that ACC can’t help us with.

According to data, most long-term workplace absences are illness-related, including cancer, stroke, heart attack, and major elective surgery – none of which are covered by ACC.

If you’re looking for more comprehensive, flexible cover to safeguard your most important asset – your income – then taking out Income Protection Insurance can be a good idea. It’s a powerful tool, designed to partially replace your income for a set period of time, if you’re unable to work due to a serious illness or injury.

You can tailor your Income Protection policy to your needs by choosing:

• Benefit amount – With most policies, you can insure up to 75 per cent of your gross earnings. The higher the benefit amount, the higher the premiums will be, so make sure you choose a level that you’re comfortable with, both in the short term and at claim time.
• Wait period – This is the amount of time you can afford to wait before the insurer starts paying you. The shorter the wait period, the higher your premiums. How long can your family cope financially without your income? Do you have a sound emergency fund in place?
• Benefit period – It’s the maximum period of time that your insurance provider will pay you for, while on claim; generally two years, five years, or until you reach retirement age at 65 (some policies even cover you until age 70). The shorter the benefit period you select, the lower your premiums will be.

Like to discuss your income protection needs?

Get in touch today. Our SHARE advisers can help you explore your options, understand the finest details, and secure a comprehensive cover to protect your future. Get in touch today.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.