Do I actually need personal insurance? A plain-language guide

If you have ever wondered whether you actually need personal insurance, you are not alone. It is one of the most common questions we hear. The short answer is: it depends on your situation. Here is how to think about it.

What ACC does and does not cover

In New Zealand, Accident Compensation Corporation (ACC) provides cover for injuries caused by accidents. Whether you’re injured at work, playing sport, or at home, ACC contributes to treatment costs and can replace up to 80% of your income while you recover, subject to maximum limits.

While having ACC support for injury-related claims is valuable, there is no equivalent support for New Zealanders who are unable to work due to illness.

This is a common misconception as many people assume ACC will also cover time off work due to illness, but this isn’t the case.

This creates a significant gap in income protection, especially given that only around 30% of disability claims are injury related. As a result, people are far more likely to be off work due to illness or disease, where no ACC support is available.

ACC can also provide financial support to family members if someone passes away due to an accident, with payments based on income and dependents, subject to maximum caps.

While this support is impactful, it’s important to recognise that accidental deaths make up only around 5% of total deaths in New Zealand, meaning the majority of deaths occur outside of ACC cover.

The four main types of personal insurance

Life insurance pays a lump sum to your family if you pass away or diagnosed with a terminal illness. If you have a partner, children, or a mortgage, it’s often one of the first things worth considering.

The key question is simple: if your income disappeared tomorrow, could your family keep the house and maintain their quality of life?

Trauma insurance pays a tax-free lump sum if you are diagnosed with a serious illness like cancer, a heart attack, or a stroke. It gives you money to cover treatment, pay bills, or take time off work without financial stress. One in three New Zealanders will be diagnosed with cancer in their lifetime.

Income protection replaces up to 75% of your income if illness or injury stops you from working. Your mortgage, your rent, your grocery bill, your power bill: none of these stop just because your pay does. This cover fills that gap until you can get back to work.

Health insurance gives you access to private healthcare. In New Zealand, our public system is good but stretched. Wait times for non-urgent surgery can be months or years. Health insurance lets you see a specialist sooner, access treatments that are not publicly funded, and choose when and where you get treated.

How to figure out what you need

The reality is, not everyone needs all four types of cover. What’s right for you depends on your income, family situation, mortgage, savings, preferences, and health history.

A 25-year-old single renter with no dependents has very different needs from a 45-year-old parent with a mortgage and two children. They’re in very different positions, so their needs naturally differ.

That’s where we come in. We take the time to understand your specific situation, compare options across New Zealand’s leading insurance providers including Partners Life, Fidelity Life, Chubb Life, NIB, Asteron Life, Southern Cross, Accuro and recommend only what genuinely makes sense for you.

What it costs

This surprises most people: our advice is free. We are paid by the providers whose products we recommend, so there is no cost to you for the consultation or the advice itself. The only cost is the insurance premiums if you decide to go ahead, and those vary based on your age, health, and the level of cover you choose.

If we sit down and determine that no changes are needed right now, we’ll tell you. Our focus is on getting it right for you, not recommending something unnecessary.

Curious about your situation? Book a free chat and we will walk through it together.