Income Protection

Why get income protection insurance when we have ACC?

If you were asked point blank, "What's your most important asset?", what would you respond? You may say that's your family's lifestyle, your house, even your car. But as important as these certainly are, they all rely on another key asset - and that's your ability to earn an income.

That's right: your income is the financial foundation of your life, and your financial goals and commitments depend on it. That's why it's so worth protecting.

However, as insurance advisers know, many people in New Zealand tend to overlook income protection insurance, thinking that ACC would step in anyway if they were unable to work. So, to cut through the confusion and help you best protect your financial future, here are some key things to know.

ACC is for accidents only

ACC is designed to help anyone in New Zealand who suffer an accident, by covering medical costs and - in some cases - loss of income. It's a great scheme and one that we're lucky to have.

And as we said, in some cases, ACC may offer some level of income protection, replacing up to 80 per cent of your gross pre-injury income as weekly compensation if you can't work due to an injury that they're covering (here's a list for reference).

However, it's important to note that ACC is for accident-related injuries only. It's administered on a no-fault basis, so it doesn't matter the way you suffered the injury, as long as it's an accident. The question is, what if the reason why you can't work isn't accidental, for example a serious illness?

Also, even if the injury was covered by ACC, you'd be expected to return to work as soon as you're well enough, either in your pre-injury job or another 'suitable role'.

The bottom line is, ACC can be helpful in many cases - but it also leaves out several key scenarios, so if you're looking for comprehensive income protection, you may want to explore other options as well.

How income protection insurance can help

Income protection is a powerful tool, designed to provide a replacement income if you're unable to work due to an illness or injury, no matter if accidental or not. It can be tailored to your needs and budget by choosing:

  • The payment amount: You can opt to replace up to 75 per cent of gross pre-disability income.
  • The wait period (how long you'll have to wait before receiving the first payment, from the day you make your claim): Depending on the size of your rainy-day fund and your budget, you may be able to choose a long wait period. And the longer the wait period is, the lower your premiums are likely to be.
  • The payment period: Usually, income protection is available until age 65 or age 70, or a shorter period of two or five years can be selected if it's appropriate for your situation and objectives.

Remember: getting the structure of your policy right can make all the difference down the line. With an appropriate level of cover, you can be comfortable in the knowledge that your lifestyle, financial goals and needs are protected.

Unsure where to start?

If you're exploring your income protection options, our quote compare tool can give you an idea of what NZ's top insurers have available for you - click here to give it a go.

And of course, our friendly LifeDirect insurance advisers are here to answer any questions you may have and talk you through the policy settings. If you're unsure about what payment amount, wait period or payment period to select, a chat with our advisers can be of great help.

Click here to send us a message, email us at or give us a call on 0800 800 400.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.

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