Difference between ACC and Income protection?
In some ways ACC is a type of income protection, but it’s not the same thing as the ‘Income Protection’ you would have heard insurance companies and other people talk about.
These are two different insurance products, we’ve outlined what you need to know below.
What is ACC?
In simple terms ACC is a government agency that provides Kiwi’s with accident insurance.
Key features of ACC you need to be aware of are:
What is Income Protection?
Income protection is a form of private insurance. It provides clients with a supplementary income, if they suffer from an injury, disability or long-term illness. This type of insurance package is designed to help people pay their bills if they ever lost their income.
Four out five long term absences from work are due to illness and not injury. Things like cancer, heart disease, strokes, or back problems are all common issues people face, which often need long periods off work for recovery. Anyone struggling with any of these common diseases would not receive any compensation from ACC. This is one of the key reasons income protection is so important, it helps protect you from the situations that are most likely to happen to you.
Key features of income insurance you need to be aware of are:
Which Option is Best for Me?
Generally a combination of both ACC cover and private income protection insurance is your best bet.
By combing the two, you’re making sure that you are getting the widest possible cover, meeting your legal obligations and planning ahead in case the worst ever happens. If you ever need to make a claim and you’re signed up to the wrong ACC package, then things have the potential to get difficult for you. By talking to a financial advisor now and getting advice on how to structure your ACC and private insurance you can reduce your financial risk, get better cover and make your life easier if you ever need to make a claim.
These are two different insurance products, we’ve outlined what you need to know below.
What is ACC?
In simple terms ACC is a government agency that provides Kiwi’s with accident insurance.
Key features of ACC you need to be aware of are:
- Signing up to ACC and paying the relevant levies is compulsory for anyone who is self-employed in New Zealand.
- ACC only pays out for injuries or deaths that are the result of an accident. It does not pay out for any illness, apart from the rare situation where an illness is the direct result of an accident (e.g. a chemical spill). It also does not provide financial assistance for pre-existing or degenerative conditions.
- If you are injured in an accident, ACC will pay towards medical visits, treatments and operations. If you have ACC CoverPlus it will also pay you up to 80% of your salary from the previous year for income you’ve lost (or to your dependants if you are killed). If you have ACC CoverPlus Extra it will pay you (or your dependants if you are killed), the compensation that you negotiated with them when you signed up.
- ACC CoverPlus will pay you 80% of your previous year’s income but there is a cap on how much they will pay out. ACC will not pay any more than $97,650 (i.e. 80% of $120,070).
- ACC does not treat all injuries the same. This means the criteria to receive ACC cover can vary at claim time.
- If you are self-employed and signed up to the wrong ACC plan, it can make things more difficult at claim time. This is why it’s best to talk to a financial advisor, to make sure you’re signed up to the right plan.
What is Income Protection?
Income protection is a form of private insurance. It provides clients with a supplementary income, if they suffer from an injury, disability or long-term illness. This type of insurance package is designed to help people pay their bills if they ever lost their income.
Four out five long term absences from work are due to illness and not injury. Things like cancer, heart disease, strokes, or back problems are all common issues people face, which often need long periods off work for recovery. Anyone struggling with any of these common diseases would not receive any compensation from ACC. This is one of the key reasons income protection is so important, it helps protect you from the situations that are most likely to happen to you.
Key features of income insurance you need to be aware of are:
- There are a number of different insurance providers all offering different schemes. It can be quite complicated choosing the right scheme for your personal circumstances, that is why it’s best to get advice from a financial advisor, who can do the calculations and analyse which plan is best for you.
- Income protection will pay out for both illness and accidents, while ACC only covers accidents.
- Income protection will pay for your loss of income, but does not pay for medical bills or provide a pay out to your dependants after your death.
- Like health insurance and ACC, income protection insurance doesn’t cover pre-existing medical conditions.
- If you need to make a claim as a result of an injury. You will receive your insured amount, less the amount you are receiving form ACC.
- If ACC decides you are fit to work and stops it’s payments before you are able to return to work, income protection will usually continue your payments until you are ready.
- Good income protection policies will also allow you a gradual return to work with continued financial support (which ACC will not).
Which Option is Best for Me?
Generally a combination of both ACC cover and private income protection insurance is your best bet.
By combing the two, you’re making sure that you are getting the widest possible cover, meeting your legal obligations and planning ahead in case the worst ever happens. If you ever need to make a claim and you’re signed up to the wrong ACC package, then things have the potential to get difficult for you. By talking to a financial advisor now and getting advice on how to structure your ACC and private insurance you can reduce your financial risk, get better cover and make your life easier if you ever need to make a claim.