Every year in over 50,000 New Zealand households, someone is unable to work for three months or more, due to illness. The average long-term absence from work is 15 months and 80% of those absences are due to illness.

ACC doesn’t cover income lost through illness

ACC won’t provide compensation for loss of income caused by illness, contagious diseases, conditions from ageing, or emotional issues. Cover only applies to injuries caused by accidents and even then, some common injuries aren’t covered.

Income Protection insurance

Only 20% of New Zealanders have income protection insurance; to provide regular income if they can’t work due to illness, trauma or an accident.

If you have income protection insurance, great! Though most policies have a stand down (waiting) period: the number of weeks you must have been off work, before you can even submit a claim. The longer the stand down period, the lower the insurance premium is

Making a claim then waiting for the paperwork, medical certificate/s etc., to be processed, also takes time - it’s not unknown for a payout to take two months from when a claim was made. It’s usually back paid, but you’ll need money to tide you over.

Have you got a 3-month cash reserve?

You’re not unusual if you don’t - not many Kiwis have money set aside ‘just in case’. Even if you have income protection insurance, it’s still a really good idea to have a cash reserve. Aim to have enough money to cover your expenses for at least three months (preferably six). Start by saving a little bit every pay day and stick at it - it’ll feel good to see your savings grow!