Income protection and ACC work in a very similar fashion and yet both are needed. Because they both work to provide income in the event of non-accident causes of disability injury, which occurs outside of work it is important that consumers understand how they differ and why they are both important. Please note that we advise you to speak with a professional FMA registered insurance adviser before making any decisions about ACC of income protection.

The Difference between Income Protection and ACC

The first difference is that everyone is eligible for ACC because ACC is provided as a benefit from the Government. This is different from Income Protection Insurance cover which is a policy that consumers must buy from a qualified insurance broker.

Another difference is what income protection and ACC cover and how long they cover each incident. The primary difference in coverage is that ACC measures your health including pre-existing conditions to establish your normal health and Income protection measures your health at what would be considered normal health. This means that ACC looks differently at pre-existing conditions and health issues that can be lumped into degenerative disease. In fact, ACC considers that the average person is cured once they return to a state of health before their injury.  The key phrase there is “before their injury.”

Case Study Scenario (fictitious)

Lets look at a typical case study example and say that a person has degenerative joint disease that effects their knees. They are within the working age group and falls while at home injuring their arm and shoulder. ACC views this as a cover-able event and provide benefits until the arm is healed.  ACC does not consider the degenerative joint issue with the knee as a cover-able event because it is considered to be pre-existing. Even if the knee becomes worse it will not be covered by ACC or not covered by ACC for very long.

Once the patient returns to what ACC deems as normal health, the patients claim ends. So in this case once the arm is healed, regardless of the condition of the knee, the patient has returned to their state of health before the arm injury. If the knee and joint degeneration were caused by a prior accident that was covered by ACC then there is a chance that the knee would be considered a covered event, but again, that is a change not a guarantee.

This is an important difference between ACC and Income Protection Insurance. If we examine the same case scenario, and apply the benefits of income protection insurance the outcome is different. So the patient, who has bad knees falls and injures their arm. They activate their income protection insurance benefits and are paid up to 75% of their income until they can return to work.

If their arm heals and they regain function, but their knee is not permitting them to work then the claim continues. Even Income Protection Insurance will limit coverage based on pre-existing conditions, but the true difference between Income protection coverage and ACC is that income protection insurance does not see degenerative conditions as a pre-existing condition.

Evaluating Coverage and Benefit Period

Because of the way that ACC views pre-existing conditions and health issues that are degenerative it is important that younger people not only understand these limitations but that they take the initiative to plan ahead for natural occurring health issues and purchase income protection insurance. The earlier that they are covered the better because they reduce their risk of losing benefits if they develop a degenerative condition. It is also important that consumers not rely on the government and become proactive in managing their own financial affairs by considering the benefits of programs such as income protection insurance.

Why Income Protection is Needed

In short, ACC should not be relied upon as the only means to protect income because of the specific way that ACC views a patient’s normal health status. Consumers should also not rely upon government programs for their financial well being. The above example shows how easy benefits can come to an end regardless of whether or not the patient can return to their job in their full capacity.


(This article and all articles on this site are not to be taken as professional insurance advice, for such advice please speak to a registered insurance broker with the FMA. We can connect you with a registered broker by using the form on this site.)