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ACC Costs and Fatal Benefits

n previous blogs we've talked about cutting ACC costs by switching to ACC Cover Plus Extra. However, you need to make sure that if you reduce the level of your ACC cover, that you have adequate life cover in the event of your untimely demise. This is because ACC pay out Fatal Death Benefits, the amount of which depends on your income for ACC purposes and the amount of the ACC payout can be very substantial. 

A spouse is entitled to 60% of the 80% ACC entitlement for 5 years whilst children (via the spouse) will receive the benefits until they turn 18 at 20% each up to 40% in total. Take, for example, an earner on $80,000 income who dies an accidental death with a spouse and two children of 4 and 7. Collectively they will receive benefits of $1,049,600. If, on the other hand, the earner had reduced his ACC income to $22,464 the benefits would reduce to $368,410, a very substantial reduction indeed! 

So, if you want to reduce your ACC premiums by switching to ACC Cover Plus Extra, you have three options:

  1. Take care not to die accidentally!
  2. Get adequate life cover
  3. Stay single without any dependants!
If you need help with ACC, contact me at Accountancy + Business Advise Centre.


Eight ACC Traps

Recently a client contacted me and said he had received a chaser letter from ACC asking for a large amount of ACC Levy and asked whether he should pay it. Not having automatic access to his ACC account (unlike the IRD) naturally I asked to see the bill. Read more…