Friday, February 26, 2010

ACC and Competition

Some of our brainless knuckle dragging anonymous commenters don't seem to know that for some time now, self employed people can seek to replace a major part of their ACC coverage with private insurance - saving thousands of dollars each year by way of reduced levies.

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.

BUT

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
That's an annual saving of a cool $2,092 and a huge improvement in the quality of cover.

Warning:

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.

9 comments:

Anonymous said...

Adolf thanks for the tip I'm in that guys shoes - could you mention the ones that do allow the split deal? (We're currently with AMP)

Cheers
Jimmie

Budgieboy said...

Good Work Adolf, it is a pity this is not more widely understood and cover for illness as well is HUGE!

My understanding is that if the client reduces the sum assured with ACC, then it will also impact on any potential death by accident payment made by ACC and if he has children then the payout (to them till age 18) could add up to quite a few bucks less, but this can also be easily covered through private insurance, (full death cover) again whole lot cheaper than ACC.

Anonymous said...

so: please explain why the fuck EMPLOYERS (who pay by far the most ACC TAXES) cannot at least do the same thing?

more to the point - why can't we reduce the level of cover what's actually necessary for our employees?

Adolf Fiinkensein said...

Jimmie drop me an e-mail at fiinkensein@gmail.com

Adolf Fiinkensein said...

anon

Mine not to reason why

Adolf Fiinkensein said...

BB, I'm not entirely sure but I have an idea that death benefit applies only in the event of a workplace accident, of which there are very few.

Alan said...

Budgie boy.

you are correct that if yo ureduce your coverage by using coverplus extra this will reduce any death by accident payouts (both for spouse and dependent children).

also Adolf, it does not have to be a workplace accident. its simply death by accident (which includes suicide, which messes with my brain a bit).

ACC are in this case actually doing their best to get the word out to the self employed, becuase it saves them a lot of grief at claim time, when self employed on workplace cover find out they are getting nothing.

My practice (in wellingtn) has been working with our clients and ACC for a while now, and should be live on their system soon for our clients. any adviser that can sort this out, will actually be able to provide full risk management advice for their clients, not just risk insurance.

Thanks for this post adolf, good to see information is getting out there.

AL

Anonymous said...

Why the FUCK do I have to keep paying ACC taxes so losers who get injured and killed get to WIN LOTTO???

the sooner Rodney gets rid of ACC, the better of NZ will be!

Anonymous said...

"Why the FUCK do I have to keep paying ACC taxes so losers who get injured and killed get to WIN LOTTO???

the sooner Rodney gets rid of ACC, the better of NZ will be!"

Shit you're hilarious Sinner (for a moronic, paranoid lunatic that is). Death, lotto and Rodney Hide! Fantastic.

Judge Holden