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7 Misconceptions about ACC and Life Insurance in New Zealand

7 Misconceptions about ACC and Life Insurance in New Zealand

In New Zealand, ACC (Accident Compensation Corporation) and life insurance are different types of protection, but many New Zealanders often confuse the difference between the two. In this blog, we discuss some of the most common misconceptions and try to provide some clarity.

Misconception 1: ACC covers all types of accidents and illnesses.

Truth: ACC only covers accidents that occur in New Zealand and are caused by a sudden, specific event. It doesn’t cover illnesses or conditions that develop over time, such as cancer or heart disease. To be eligible for ACC coverage, your injury must have been caused by a work-related or non-work-related accident. Additionally, ACC doesn’t cover accidents or illnesses that occur while travelling overseas. In these cases, travel, health, or life insurance are necessary.

Misconception 2: ACC covers all medical expenses.

Truth: ACC only covers the costs of treatment for an injury, such as medical appointments and rehabilitation. It doesn’t cover costs like lost wages, travel expenses, or the cost of care for dependent children. Additionally, ACC doesn’t cover dental treatments or cosmetic surgeries that might be desirable but aren’t considered necessary for recovery from an injury.

Misconception 3: Life insurance covers all types of death.

Truth: Life insurance pays a lump sum if the policyholder dies because of an illness or accident. However, it doesn’t cover deaths that result from base jumping, trans-ocean solo-sailing, caving, canyoning, deployment in the armed forces or suicide for the first 13 months of your policy. It’s important that you read and make sure you understand the terms and conditions of a life insurance policy before purchasing it. So that you know exactly what you’re covered for.

Misconception 4: Life insurance is only for older people.

Truth: Life insurance can be purchased at any age and can provide financial security for dependents if the policyholder passes away. It can be worth considering life cover when you are in your twenties because your rates will be lower, and so that you can get some of the other benefits, such as critical illness or trauma insurance.

A young couple may choose to have life cover if they have bought a home together so that if something happens to either of them, the remaining partner can keep the home they purchased. A young family with children may buy life insurance to provide for their children’s future if something happens to either parent.

Misconception 5: Life insurance only pays out if you die.

Truth: While death is the most common reason for life insurance to pay out, Critical Illness and Disability policies (sometimes known as Trauma Cover) that you can add to your life cover also provide coverage for critical illnesses, and permanent disabilities. Your life insurance will also pay out if you’re diagnosed with a terminal illness and expect to live less than 6 -12 months.

Misconception 6: ACC and life insurance are the same thing.

Truth: ACC and life insurance serve different purposes. ACC covers accidents, while life insurance provides financial protection for you and your family in the event of death, terminal illness, critical illness, or permanent disability.

Misconception 7: ACC is free.

Truth: ACC is funded through levies on salaries, wages, and other income, as well as through government funding. While ACC provides no-fault coverage for accidents, it is not free, and the levies and taxes you pay contribute to its funding.



In conclusion, it’s important to understand the details and differences between ACC and life insurance to ensure that you have the right cover for your needs. Don’t hesitate to reach out to us for more information. We’re always happy to help.

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