Do I Need Income Protection if I Already Have ACC?

ACC covers accidents and injuries, not illness, and a large share of income protection claims in New Zealand are for illness rather than injury. ACC payments can also be offset against some types of cover. So for many working New Zealanders, income protection is about the gap ACC leaves: not being able to work because you are unwell, rather than injured.

What does ACC actually cover?

ACC provides cover for personal injury, generally from accidents, and can include support such as a portion of lost earnings while you recover. It is a broad and valuable scheme, but it is focused on injury. Conditions that are not the result of an accident usually sit outside what ACC covers.

What does income protection cover that ACC does not?

Income protection is designed to pay a regular amount while illness or injury stops you working, depending on the policy. Because most claims people make are for illness, the main thing it can add for many people is cover for being off work due to sickness, which is not ACC’s focus.

Will my income protection be reduced by ACC?

It can be. Some income protection cover takes other payments, including ACC, into account, so that the combined amount does not exceed a set portion of your income. The way this works varies between policies, which is one of the details worth understanding before cover is put in place.

Who tends to consider income protection most?

People whose household relies heavily on their income, such as those with a mortgage, dependants, or limited savings to fall back on, often look closely at income protection. The self-employed, who may have less of a safety net if they cannot work, are another group who frequently weigh it up.

How much income protection can I get?

Cover is usually expressed as a portion of your income rather than the full amount, and the terms, waiting periods and payment periods vary. Because there are several moving parts, many people work through the options with an adviser so the cover matches their situation and budget.

You can read more about how income protection sits alongside other cover on our personal insurance page.

The information in this article is general information only and is not intended as financial, medical, health, tax or other advice. It does not take into account any individual’s personal situation or needs. You should consider obtaining professional advice from a financial adviser and/or tax specialist in relation to your own circumstances and before acting on this information.