I’ve said for many years that Kiwi's love being self-employed, and we seem to switch between employed and self-employed a lot. Some succeed, some have a change of direction, and some are about a change of situation. The point is that change is inevitable.

What will surprise you; typically, there are over 45,000 start-up businesses each year in New Zealand. Anecdotal evidence also suggests that a large number of these businesses are registered with the Companies Office early in the new year. Unfortunately, a lot of these businesses will simply fail due to cash-flow constraints. Some will be because the business isn’t sustainable, but the more likely reason is someone got injured or was prevented from working due to a disability.

I've spent 24 years in financial services, during which time I've worked on a significant number of difficult income protection claims. I still don't understand why the indemnity-first approach for income protection still prevails with the majority of advisers in today's environment.

Well, I do. It's not the client-first approach we'd all like to expect. Advisers have to do less and get paid more, but that's another story.

As a home based worker, insuring your income can be a bit of a challenge in some situations, though with post Covid, work from home has become more accepted by insurers. 

The question is what do you do and how mobile do you have to be to do it? 

To be clear, I'm talking about those people who earn an income rather than those who are in unpaid occupations. The later is another article.

I'll be exploring a few situations and the insurance approach for paid home based workers, to give you a bit of an idea about how you can protect your income if you work from home.

An interesting question that is often asked. In a nutshell, whatever you like, just that it gets deducted from your ACC weekly compensation claim.

ACC weekly compensation is there to cover loss or replace a loss of income. You earn something that loss is reduced; your ACC payment will be reduced too.

How does this work?

Most people, when discussing income protection for the first time, assume it automatically covers job loss (redundancy). It doesn't, and it's often not an option. Over the last 5-10 years, this has ebbed and flowed, with mortgage repayment having redundancy as an option, and some income protection too. Post Covid, most no longer have redundancy cover available.

The point I am making is things change, but this article is not about redundancy.

What I am talking about is a new product Asteron Life released in 2015, that is quite different to the normal income protection approach.

I'm looking for insurance cover, but I do some interesting things;

By interesting things, I'm assuming this is related to your hobbies, activities and occupation. 

Insurance companies do take an interest in what activities you do because sometimes they are risky. Immediate things which come to mind for most people are bungy jumping and parachuting. The list is much longer.

Interesting research out of Australia, yes I know Aussie. However, as our closest neighbour, most research has some value for insight or application in our market too.

What is interesting with this, is the insurance uptake across all products is generally better in Australia, with house car and contents being the most similar to us.

This research was specifically about insurance literacy, most of the time these reports are on investment or financial literacy or subject matter and insurance is treated as a by-line. Which for those relying on it, it is far from a by-line.

Self-employed? Yup.

Sick of hearing about ACC and health and safety? Yup!

Ok sorry I've got news for you, neither is going away in a hurry. Actually the health and safety bit is going to get worse. I'll talk more about that in another post, as there's a few things going on in the background I'm looking at for clients.

Back to the self-employed and ACC thing.

You've got a fairly steep learning curve going on and ACC has just thrown a spanner in the works. It's a spanner in the works because ACC isn't intuitive and you're short on time and don't have time to figure this crap out right now.

If this resonates with you, you need to read this, it will short cut this for you.

Let's start with the simple things you need to understand first.

In our opinion in all situations Agreed Value is. Yes, there are some clever tricks you can play with tax and claims on indemnity or loss of earnings, but the vast majority of claims just don't work out like that at claim time.

In my experience when it comes to Income Protection claims, indemnity claims cause the most headaches. In my time as a manager looking after advisers and as an adviser myself, the only problematic claims I have had were indemnity claims. Agreed Value never had the drama and hassle.

The short answer: depends.

The longer answer: maybe, maybe not.

No I am not trying to be difficult, it does depend on the policy you have so maybe, maybe not.

The simple answer:

If you have indemnity or loss of earnings yes, it is tax assessable. If you have agreed value, it is generally not tax assessable. But there's more, no not a set of steak knives, really there's more.