Being your own boss offers freedom and flexibility, but it also means taking full responsibility for your financial well-being. Unlike salaried employees, self-employed Kiwis must consider how illness, injury, or unforeseen events might impact their income. This guide covers the essential types of insurance you should consider, myth-busting insights, and common mistakes to avoid.
Self-employment plays a significant role in New Zealand's economy. As of 2024, approximately one in five working Kiwis is self-employed, with industries like construction, agriculture, and professional services leading the way. The rise of the gig economy has also fuelled this growth, with more individuals seeking flexibility and independence in their careers. However, with this independence comes the need for proactive financial protection—especially since self-employed individuals don’t have access to employer-provided benefits like sick leave, health insurance, or workplace protections. That’s where the right insurance strategy becomes essential.
ACC provides coverage for injury-related incidents. However, the standard ACC Cover may not sufficiently protect self-employed individuals. ACC Cover Plus Extra allows you to pre-agree on a compensation amount, providing predictable financial support if you're injured and unable to work.
Tip: ACC only covers injuries, not illnesses. For broader coverage, consider pairing ACC with income protection insurance.
Your ability to work is your greatest asset. Income protection insurance provides regular payments if illness or injury prevents you from working. Unlike ACC, it covers conditions like cancer, heart disease, and mental health issues. Policies typically cover up to 75% of your income and can be tailored with waiting periods and benefit lengths to suit your needs. For example, if you’re a self-employed builder, an income protection policy ensures you still receive an income if a back injury keeps you off the tools for several months.
When you’re self-employed, you don’t benefit from employer-sponsored health insurance. Private health cover provides faster access to specialist care, diagnostic tests, and elective surgeries, helping you get back to work sooner. Look for policies with comprehensive coverage, including consultations, imaging, and minor surgeries.
Your health can directly impact your business operations. Business Overheads insurance covers essential costs—like rent, utilities, and staff wages—if you're temporarily unable to work due to illness or injury. This ensures the business can continue running while you recover.
Life insurance provides a lump sum payout to your family if you pass away, while trauma insurance offers financial support if you’re diagnosed with a critical illness. These policies give peace of mind that your loved ones and your business obligations are protected.
Despite the importance of insurance, many self-employed individuals delay taking action due to misconceptions. Let's debunk some of the most common myths.
"ACC Covers Everything".
ACC only covers injuries, not illnesses. If you're unable to work due to a medical condition like cancer or chronic illness, you won’t receive ACC payments. Income protection insurance is essential to fill this gap.
"I’m Healthy, So I Don’t Need Health Insurance".
Health issues can arise unexpectedly. You may face long public waitlists for diagnostic tests or surgery if you don’t have health insurance. Health insurance ensures quicker access to care and minimises downtime.
"Insurance is Too Expensive".
Insurance policies can be tailored to fit your budget. While premiums may seem like a cost now, the financial impact of being uninsured during a crisis can be significantly higher.
"My Savings Will Cover Me".
Relying on savings alone is risky. Serious medical conditions or prolonged work absences can quickly deplete even the most robust savings. Insurance provides a reliable safety net without jeopardising your financial goals.
"Insurance Claims Often Get Declined".
Most legitimate insurance claims in New Zealand are approved and paid out. Ensuring full and honest disclosure when applying for insurance significantly reduces the risk of claim issues.
Even with the right insurance products, mistakes can leave you exposed. Here are some common pitfalls to avoid.
Declaring a lower income to reduce premiums is a common error. If you’re injured, your compensation won’t cover your actual expenses. To avoid this, reassess your income annually to keep your cover accurate.
Many self-employed individuals rely on personal income protection to cover business costs. However, income protection replaces your salary but won’t cover business expenses like rent, staff wages, or loan repayments. If you have ongoing business costs, this insurance is crucial.
Selecting insurance solely based on price is risky. Low-cost policies often exclude essential coverage like diagnostic tests or mental health support. Compare benefits, exclusions, and claim processes, not just premiums.
ACC only covers injuries—not illnesses like cancer or heart attacks. Pair ACC with a comprehensive income protection policy to protect your income regardless of the cause of work absence.
Setting policies and forgetting about them can leave you underinsured. Your insurance needs may also evolve as your income or business structure changes. Schedule an annual insurance review to keep policies aligned with your circumstances.
Running your own business is rewarding, but it comes with financial risks that can be mitigated with the right insurance plan. Don’t leave your financial security to chance. Contact the team at Eureka to discuss a customised insurance strategy that supports your business and personal goals.
