If you’re self employed staying healthy is pretty important. Getting sick or injured can have a big impact on your ability to keep the money rolling in.
Out of every 100 builders off work through disability, 90 of you will be laid up due to illness not accident. And yet ACC only provides compensation for accidental injury, not illness.
Most self employed people switch their ACC plan to something called Cover Plus Extra, which allows them to dial down their ACC levy contributions. These savings are used to buy income protection (also called loss of earnings) insurance, which then gives cover for both accident and illness, substantially broadening the cover you get to include the events that are most likely to keep you off work.
While employees don’t pay their own ACC levies, you can still benefit from income protection insurance if you’re forced off the job through illness.
A Typical Example
Consider Jim, a 40 year old builder earning $80k:
Jim's ACC levy works out at around $67 per week for injury only cover. By reducing his ACC cover to the minimum allowable under Cover Plus Extra and taking out private loss of earnings insurance he ends up paying $66 per week for cover that includes both injury and illness. This is based on a 5 year benefit period vs cover under ACC that could run until retirement. However, as 91% of claimants are back to work within the first 5 years this makes sense. Alternatively, for cover that runs until age 65 the cost would be an extra $20 per week.
If you haven’t done this yet, or want to review the cover you have, get in touch with us. We'll arrange for you to have a chat with an adviser and put some options on the table.