Best Builder Income Protection Insurance
Want to learn how best builder income protection insurance works?
Do you think of yourself as someone who has achieved a lot and can be proud of your work every day? I hope you say “yes”. The reason for it is simple since you are reading this article 9 out of 10 you are thinking about “what would you do?” if you stop working due to an illness or an accident.
I am sure you have heard this before, but it was BEFORE, you are now and here and let’s get down to the “nitty gritty” of builder Income Protection Insurance, and I mean it – a
Builder Income Protection Insurance
is somewhat different to an accountant’s one.
There are two things to answer first:
Are you self-employed? or do you work or sub-contract for someone? The reason for this sort of question is simple – in the event you broke your leg (accidently falling from the ladder) how would you be able to claim ACC? You know that ACC is going to pay 80% of your pre-disability income, right? So, how would that be? If you are a self-employed and your accountant is helping you to “minimise” your income tax you also know that you are going to get only 80% from the amount you actually paying your tax for.
If on the other hand you work as a subcontractor and declare your full income to the IRD – then the answer for you is simple and you can insurer as much as you declare. On the top of that ACC is going to pay you 80% of your pre-disability income after 1 week of waiting period. The question is – would 80% be as comfortable as 100% you already used to?
There are two insurance companies in New Zealand which would provide you with the best Income Protection Insurance. One is called Fidelity Life and the second one is Asteron. These two companies have created something what many builders refer to as the best builder income protection insurance. All of only due to the fact that both companies have come up with something what i call strategic approach to the profession and the industry.
Asteron for instance in the event you had an accident has Income Protection Insurance policy which pays in the following way:
Let’s say your income (before you broke your leg) was $100,000 annually and since you broke your leg above the right knee it means that most likely you are going to be on ACC claim for instance 8 months and as you would imagine you would not be able to drive your good looking ute.
If you did not claim (meaning the accident did not happen) you would have received
$8,333.34 monthly (100,000/12) x 8 = $66,666.67
Since you are on claim you only receive 80% from ACC for the eight months the amount is $55,555.56 or only $6,944.45 monthly.
If you had your Income Protection Insurance from any (and I repeat any insurance company) your Income Protection Insurance would not pay you BUT Asteron’s Income Protection Insurance is going to pay! Asteron sees it this way:
Since your monthly income was supposed to be $8,333.34 and you only receive from ACC (80%) Asteron see it as the loss of income and therefore will pay in addition to ACC 75% of your lost income
$8,333.34 – $6,944.45 = $1388.89 x 75% = $1041.67
Which means that if you had your Income Protection Insurance policy from a different insurer then you would receive $1041.67 less to compare to Asteron.
Other example is Income Protection Insurance from Fidelity Life. This policy would pay you on the top of ACC payments and the payments are going to be treated as an addition to the amounts you receive from ACC. The policy has “Specific” injury benefit which means that you are in title to get the payment if something like that happened to you:
- Fracture of skull, jaw 30 days payment and it is calculated on your 75% pre-disability income which according to our calculations above is $6,250;
- Fracture of forearm, collarbone 30 days payment $6,250;
- Fracture of wrist 45 days which means one payment for one and a half month $9,375;
- Fracture of upper arm, shoulder bone, elbow 60 days one payment for two months $12,500;
- Fracture of vertebrae 60 days one payment for two months;
- Fracture of kneecap 60 days one payment for two months;
- Fracture of ankle, heel 60 days one payment for two months;
- Fracture of leg below the knee (tibia or fibula) 60 days one payment for two months;
- Fracture of leg above the knee (femur), pelvis 90 days one payment for three months $18,750;
- Loss of thumb and index finger of the same hand 6 months one off payment for six months $37,500;
- Loss of one foot or one hand or sight in one eye 12 months one off payment for 12 months $75,000;
- Loss of one leg or arm 18 months $112,500;
- Loss of both feet or both hands or sight of both eyes 24 months $150,000;
- Paralysis (Diplegia, Hemiplegia, Paraplegia, Quadriplegia) 60 months $450,000 – I hope you would agree here – the amount is most likely going to cover your mortgage and ACC payments you are going to receive would provide with additional comfort. Where fracture means any fracture resulting from an accident requiring fixation, immobilisation or plaster cast treatment of the affected area within 48 hours of the accident. The fracture is to be certified by a medical practitioner.
- Loss of any combination of two of the following:
- a hand
- a foot
- sight in one eye
24 months $150,000
Where loss means the total and permanent:
- Loss of the use of the hand from the wrist or the foot from the ankle joint; or
- Loss of the use of the arm from the elbow or leg from the knee joint; or
- Complete severance of the thumb and index finger from the first phalangeal joint;
- Irrecoverable total loss of an eye or sight in the eye.
The benefit starts to accrue when the specific injury is suffered and is paid monthly in advance and will stop when the payment period expires. The benefit payment period is limited to the lesser of the payment period as shown in the table above and the benefit period.
Total and Permanent Disability
A Total and Permanent Disability Benefit, equal to 24 times the monthly benefit will be paid as a lump sum if:
- A monthly benefit has been paid for 12 consecutive months in respect of an insured person; and
- That insured person suffers a total and permanent disability.
There is no such a policy with the same financial ratings in New Zealand. I hope the information above was helpful and you want to discuss your situation.
If you want to discuss your best builder income protection insurance please get in touch with my office.