The only surprise is that this fortunate state of affairs has not been publicised widely.
Take this example of a thirty eight year old non smoking 50/50 share milker earning $200k per year. (Many earn more than this when one takes into account drawings plus loan principal repayment and family accommodation.)
He is a top class Maori farmer and his name is Kau Koki
Kau has negotiated an 'agreed value' position with ACC using their Cover Plus Extra facility whereby he has the maximum allowable benefit of $88,015 per annum paid out in the event of an accidental disablility claim. There is a one week stand down.
His ACC levy for this cover in the year ending March 31st 2011 will be $6,094.
Kau can negotiate with ACC to reduce his level of cover (and levies) to just $20,800 and go elsewhere (private insurers) to replace the balance of his cover.
In doing so he can obtain a longer stand down period which slashes his premium cost. It is far more efficient to fund short term claims himself than it is to pay huge premiums to ACC or an alternative insurer. So he takes a thirteen week stand down along with a $20k trauma benefit which pays out immediately upon diagnosis of forty or so major medical issues, thus mitigating some of the thirteen week risk. The rest he carries himself. Kau now is fully covered for illness related disability as well as accident.
How much does he pay?
- ACC .........................$1,922
- Insurer ...................$2,080
- Total ........................................$4,002
People need to take care to ask all the right questions. Adolf understands not all private insurers currently will enter into this arrangement. Some apparently have tricky policy wordings which mean they will only pay the difference between the maximum ACC 'entitlement' and the sum insured.
Adolf knows which insurers these are.