Income protection insurance in NZ: where ACC stops and your risk starts

Many New Zealanders who stop working for six months or more are sick rather than injured. ACC pays up to 80% of your income if you fall off a ladder — and nothing at all for a cancer diagnosis, a back that gives out over five years, or a breakdown. The household most likely to be caught out is a couple in their late thirties with children and a mortgage approved on two salaries, who deferred the cover because the premium looked untenable. In this episode, SortMe Resident Money Writer Hugo Jonston sits down (on paper) with Jamie Reynolds, a financial adviser at Naked Finance in Auckland, who spends his weeks across the table from couples like this. ACC is one of the few institutions that works well — *"Let's establish first off that ACC is a really good thing"* — but the scheme was built to leave out illness, sickness, contagious disease, stress and emotional conditions, ageing-related conditions, most hernias, and gradual-process injuries. And its own numbers (a ~$9.8B shortfall in the 2025 Annual Report, plus a January 2026 Turnaround Plan) point to it getting stricter rather than kinder. So the events most likely to take you out of work for half a year are the ones ACC was designed to leave out — and the part it does cover is being trimmed. In this episode: - What ACC actually covers (weekly compensation up to 80% of pre-injury income, usually from day 8) and the list ACC itself publishes of what it doesn't — starting with illness and running through ageing conditions and gradual-process injuries - The financial signal underneath — ~$63.6B outstanding claims liability against ~$53.8B in assets, and Jamie's read: "because it's massively oversubscribed and we're seeing more and more applications declined, looking after yourself is becoming more and more of a requirement rather than just a good idea" - The household running uncovered — two incomes now one-and-a-half because of parental leave or three days around daycare, mortgage approved on both full salaries, and a premium that looks impossible when the surplus has already gone on nappies and the car seat - The wider context — the Financial Services Council's *Financial Resilience Index 2026* finding 59% of New Zealanders saying money has affected their mental health, and job-security confidence dropping from 85% to 80% since 2024 - Why income protection is expensive on purpose — Jamie: "it's expensive for a reason. It's one of the most claimed-on insurances out there" — and why life cover on a healthy 40-year-old is cheap by comparison - Why there is no universal order of importance across income protection, trauma, life, TPD and health — every case is subjective, comparison sites are paid per policy, and "it depends on your household" doesn't convert - The five-year check every adviser runs — new job, second child, rent to mortgage, partner going self-employed — any one makes a five-year-old policy the wrong size, and most households have had two or three - Why the number the household brings to the meeting is everything — Jamie: without a real after-tax income and monthly spend figure, "it is a best-guess scenario" that can be out by a thousand dollars a month either way - The $1,200-a-month couple — paying that for life cover for years until a proper review found they were self-insured with no need for it; $14,400 a year redirected to savings, a term of school fees or a very good family holiday sitting inside one unread policy - Where SortMe's Protection area fits — every policy you already hold in one register with documents attached, real after-tax income and monthly spend on tap for the adviser conversation, warnings before a policy renews or the card it's paid from expires, and plain-language flags for a mortgage with no life cover, income doing the heavy lifting with no income protection, or cover that hasn't been reviewed since before the kids or the house Read the full article: sortme.com/post/income-protection-insurance-nz