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ACC & Sick Leave
A Couple of Points....
ACC
I will not say much about ACC - best to visit their website for more information
www.ACC.co.nz
When it comes to insurance it is good to remind everyone that ACC generally only covers conditions related to an Accident. A few times I have spoken with sick people who were surprised ACC were not paying them during their prolonged period away from work due to their Illness.
It is also important that ACC will pay you "up to" 80% of your pre-accident income. So "up to" may not always mean 80%.
It is also important to know that ACC may not keep paying you 80% of your pre-accident income forever, for Years. That is the reason many people put in place Income Protection which covers both Accident and Sickness, and can be a more stable and predictable income for very long periods off work due to accident or sickness.
If you do have an accident and have an Income Protection policy in place, and also receive ACC, it is important to know that in most cases the income protection claim will be reduced by any ACC payment you are receiving. Why you ask? The general rule with all insurance is that you should not be "financially better off" at claim time than you were before the insurable event occurred.
Imagine you had a $20,000 car, and then insured it for $20,000 with three different insurance companies. Then you destroyed your car - and received $60,000 in claims. You would be highly motivated to destroy your car.
It is the same with "people" insurance. If you received 80% of your normal income from ACC PLUS 75% of your normal income from your Income Protection, that would mean you would be receiving 155% of your normal income, and you would be highly motivated to stay sick and on claim for as long as possible. That is why ACC payments are deducted from Income Protection payments.
Note: With most Mortgage Protection policies, ACC payments are not generally deducted at claim time, because the claim amount is designed to be able to pay the monthly mortgage payments.
Sick Leave
Some people have sick leave they can carry over to the following year if they do not use it, resulting sometimes in a month or more of sick leave owing. Others have a maximum number of sick days per year, usually 10 days.
When considering Income Protection and Mortgage Protection, it is important to understand your sick leave entitlement from work and consider this when deciding upon the "wait period" before claiming. Savings also help to determine the best wait period for you.
Unlimited Sick Leave: I have had multiple clients over the years who said they had "Unlimited" Sick Leave. But when I asked them what that really meant, they did not really know. I said, "If you had a really bad car accident, or a Stroke, or long term Cancer, how long is your work going to pay you for?". I have met with a couple of HR people and asked them about "Unlimited Sick Leave" and was told by both that such sick leave would quickly come to an end if it was obvious the employee would be unlikely to return back to work in a reasonable period of time. If you have "unlimited sick leave" I wonder what it really means in your case?