Mark Morgan-Kemp from NZ 1st Financial Services discusses income protection for self-employed people.

If you are self-employed it is worth comparing the differences between ACC’s cover products, ACC CoverPlus and ACC CoverPlus Extra, to ensure you will be adequately covered in the event of an accident.

By definition, you are categorized as self-employed if you work as a sole trader, are in a partnership, or your income is subject to withholding or scheduler payments. If you own shares in a close company that employs you, you are categorized as a shareholder-employee.

While most self-employed people have ACC CoverPlus and are satisfied with the security it provides, there are limitations within the cover that are often only discovered when it is too late. ACC CoverPlus Extra is an optional product that allows self-employed individuals and non-PAYE shareholder-employees to set a pre-agreed level of accident compensation without having to prove loss of earnings. This can be particularly beneficial for individuals with fluctuating income, or where personal income is not a true indication of actual earnings, or where a business will continue to generate income despite the individual being injured.

ACC CoverPlus Extra Versus Standard ACC CoverPlusACC table pic 2

* LLWC stands for Lower Level of Weekly Compensation, an option where you can pay a slightly lower levy in return for a level of weekly compensation that reduces with the more hours you are able to work

How Much Does It Cost?

ACC CoverPlus Extra levies are calculated based on:

  1. The previous year’s earnings from self-employment and the levy rate specific to your business/occupation activity.  Non-PAYE shareholder-employees can be classified under their individual occupation – this is particularly important where one of the shareholders isn’t actively involved in the business, thus categorizing them on a lower risk levy rate and potentially making significant savings.
  2. The agreed level of lost earnings cover.

For example, a builder’s annual levy ranges from a minimum of $2,125 to a maximum of $5,287.  A dairy farmer’s annual levy ranges from a minimum of $1,779 to a maximum of $4,920.  Online calculators are available to help you to estimate individual levies.

Additional Considerations

Statistics indicate that the majority of disability claims greater than six months’ duration are caused by illness and not by injury.  ACC does not cover loss of income resulting from illness, and Income Protection insurance can be used to effectively bridge the gap and provide an additional level of security.

Expert assessment can objectively evaluate the optimal combination of Income Protection and ACC to:

  • Provide the appropriate amount of insurance required in the event of either illness or accident.
  • Reduce the duplication of insurance for accidental events to the extent they are covered under law.
  • Obtain the most cost-effective premiums by appropriately structuring Income Protection and ACC levies.

NZ 1st Financial Services offer free, no-obligation ACC assessments.  For more information phone (09) 489-5008 or email