Is your most valuable asset covered?

If the worst were to happen and you were forced out of work by an unforeseen illness, ACC wouldn’t cover your lost wages – so what are the alternatives?

If you think being unable to work for an extended period of time is the fate of only a few unfortunate souls, then the following statistics should help you understand why it’s important to take the potential threat of illness seriously:

• Four out of ten Kiwi men will be off work for at least six months at some time in their life.¹
• 90% of disability is due to an illness rather than an accident.²
• ACC only covers accidents, not illnesses.

If the only cover you have is through compulsory ACC levies, forced time off work as the result of an illness could put you and your family at financial risk.

Ministry of Health data shows that:

• For 25-44 year old males: 25% of health loss will be from mental disorders, such as anxiety or depression (compared to 15% from injury).³
• For 45-64 year olds: 24% of health loss will be from cancer and 16% from vascular disorders (eg, heart disease and stroke), with injury representing less than 10%.³

Given these numbers, it’s clear that ACC just doesn’t cut it when it comes to covering the problems that are most likely to keep you off work.

The simple solution

If you’re self-employed and already paying ACC levies, the good news is that it’s simple and inexpensive to broaden your cover to include illness.

That solution is switching to ACC Cover Plus Extra, in combination with private loss of earnings (income protection) insurance.

A typical example

Mike, a 40-year-old builder earning $80,000, pays around $67 per week in ACC levies. If an accidental injury forced him to take time off, he would receive $1,230 per week in compensation.

If Mike optimised his ACC with Cover Plus Extra and private loss of earnings insurance, he would be covered for accidents and illnesses for between $1,150 and $1,270 per week (depending on the reason for the claim).

He would pay around $66 per week for cover that would last for five years, or $86 per week for cover that would last until he turns 65. Given that 91% of claimants are back to work within five years, depending on age, the five-year benefit option works for most people.

If someone else pays your ACC levies, don’t worry. You can still arrange loss-of-earnings insurance to guarantee your income if you’re off work through illness.

To work out what’s best for you and your family, we recommend speaking to a financial adviser who specialises in this area. They will talk with you about your individual circumstances and recommend a solution that best meets your needs.

In a nutshell

If the only protection you have from loss of income is ACC, you could be at substantial risk from disability through illness.

The right package won’t cost you much more than what you’re already paying in levies and will ensure you’re better protected in case of illness.

It might not seem like the biggest priority right now, but for you and your family’s peace of mind, it’s worth getting sorted.

The information contained in this article is general in nature and not intended to be personal advice.
Builtin Insurance specialise in insurance for builders & tradespeople. For more information visit www.builtin.co.nz, email Ben Rickard at ben@builtin.co.nz or call him on 0800 BUILTIN.

_{¹Tower Risk study}

_{²Council for Disability Awareness,
Long-Term Disability Claim Review 2014}

_{³NZ Burden of Diseases,
Injuries & Risk Factors Study 2006-2016, Ministry of Health}