Many New Zealanders believe they don’t need income protection because they have ACC.

But ACC doesn’t cover everything…

One of the most common things we hear when discussing insurance with clients is:

"I probably don’t need income protection - ACC will cover me if something happens."

ACC is New Zealand’s largest public insurance scheme and is an incredibly valuable system that supports millions of Kiwis every year.

However, the level of cover ACC provides is often misunderstood.

ACC generally covers injuries caused by accidents. But it does not usually provide income support if you’re unable to work due to illness.

This distinction is very important.

For most of us, our ability to earn an income is what keeps everything else in our lives running - our mortgage or rent, living expenses, family commitments and day-to-day costs. If that income stops, it can have a significant impact on our financial stability.

Research, along with our experience working with clients, shows that many of the conditions that prevent people from working are illness-related rather than accident-related.

For example:

• cancer
• heart conditions
• strokes
• chronic health issues
• mental health conditions

These are the types of events that often stop people from being able to work for a period of time.

Income protection insurance is designed to help fill this gap that ACC does not cover. The aim is to help replace a portion of your income if illness or injury prevents you from working, so you can continue meeting financial commitments such as mortgage payments, rent and everyday living costs while focusing on recovery.

For many people, ACC and income protection work alongside each other.

ACC may provide support if an accident occurs, while income protection can provide support if illness prevents someone from working for an extended period of time.

Everyone’s situation is different. The level of protection someone may need will depend on their financial commitments, income and personal circumstances.

Understanding how these protections work - and where potential gaps may exist - can help you make more informed decisions about your financial security.

If you’d like to have a chat about how we can help, please feel free to contact us: hello@solutionsfinancial.co.nz

Please note this information is general in nature and should not be taken as personalised financial advice. We recommend you should seek appropriate personalised advice to suit your individual circumstances.