Self-employed personal insurance: Safeguard your family, health, and income

Why do self-employed individuals need personal insurance?

Without a steady income and employer-provided benefits like paid sick leave, parental leave, or group health insurance, self-employed individuals often bear full responsibility for their financial security. This can include covering taxes, work-related costs and levies, transportation, and medical care.  

A serious illness, injury, or disability can be devastating to self-employed, halting their income stream and jeopardising their job and their family’s financial stability.

Why relying solely on public healthcare and ACC is risky 

• Public healthcare shortfalls: New Zealand’s public healthcare system provides essential medical services. However, patients often suffer long waiting times for non-urgent treatments, with others even being declined for specialist appointments. This can significantly impact your finances, especially if you have to take time off work while unwell and waiting for treatment.

Substantial delays in receiving medical care can also exacerbate your condition, leading to more serious treatments, longer recovery times, and further financial losses.

• ACC (Accident Compensation Corporation) limitations: While ACC provides financial support for injuries due to accidents and treatments and work-related gradual process conditions, it’s often not enough to cover living expenses, take time off work to recover, or meet all ongoing costs.

Neither does ACC cover serious health issues like cancer and heart attack, disabilities due to illnesses, and deaths that are unrelated to ACC-covered conditions.

The table below illustrates the benefits of self-employed personal insurance, and the risks of not having the right cover.

Self-employed medical insurance

Comprehensive health insurance ensures that self-employed professionals can access healthcare quickly, so they can return to work sooner.

Here’s why self-employed should consider getting medical insurance:

• Quick access to healthcare: You can avoid long waiting lists for specialist appointments and treatments, recover faster, and return to work sooner.
• Comprehensive cover: The best health insurance plans provide in-depth cover for a range of medical expenses, including specialist consultations, diagnostic tests, hospital treatments, surgeries, and non-Pharmac-funded drugs.
• Protection for your family: Many policies offer the option to include family members, ensuring that your loved ones receive timely medical care without financial strain.
• Reduced financial stress: By speeding up healthcare access and recovery, medical insurance minimises lost income. It also protects you from expensive out-of-pocket healthcare costs which could set your family back financially.

Self-employed income protection insurance

Income protection insurance provides a percentage of your income when you’re unable to work due to illness or injury.

Here’s why income protection insurance is a good fit for self-employed:

• Regular payouts: Income protection policies provide monthly payments, helping you meet regular, essential expenses, such as mortgage or rent, household bills, utilities, and work-related costs.
• Flexible cover: You can tailor policies to suit your specific needs, such as nominating the waiting period before benefits start and how long payments will continue.
• Recovery without financial stress: With the financial pressure lifted, you can focus on your health and recovery, ensuring a speedy return to work.

Life insurance for self-employed individuals

Life insurance provides your beneficiaries a tax-free lump sum if you pass away. Some plans also offer advance payouts if you’re diagnosed with a terminal illness and given less than a year to live.

The life cover benefit allows the insured or their beneficiaries to manage immediate expenses, and plan ahead.

• Financial security for loved ones: Life insurance helps your family pay for living expenses, maintain their lifestyle, and prepare for the future.
• Cover outstanding debts: Life insurance benefits can be used to cover your home loan and other debts.
• Safeguard business assets: The payout from a life insurance policy can also be used to secure your business, ensuring its continuity or supporting its sale.

Trauma (critical illness) insurance for the self-employed

Trauma (critical illness) insurance offers a lump sum payment if you’re faced with a serious illness, such as cancer, heart attack, or stroke. Since self-employed individuals don’t have employer-provided benefits like paid sick leave, trauma insurance ensures that during a health crisis, your finances remain stable and your family is taken care of, so you can focus on your recovery.

Self-employed individuals can use their lump sum benefit to cover:

• Medical expenses, such as non-Pharmac-funded treatments, specialist consultations, diagnostic tests, surgeries, and hospitalisations at private health facilities
• Recovery and rehabilitation costs related to ongoing therapies, rehabilitation programmes, or home care support
• Living expenses like rent or mortgage payments, utility bills, groceries, transportation, and other essential expenses.

Total permanent disability (TPD) insurance for the self-employed

Total permanent disablement insurance provides a lump sum payout if you become permanently disabled and cannot return to your usual or any occupation.

You can use your TPD benefit to help cover: 

• Private healthcare, including the costs of non-Pharmac-funded drugs, specialist consultations, treatments, and rehabilitation
• Home or vehicle modifications
• Living expenses, such as rent, mortgage, food, utility, and transportation costs
• Costs of hiring a carer or replacing the income lost by a partner who takes time off work to care for you.

Mortgage protection insurance for the self-employed

With no guaranteed income, self-employed individuals may face higher financial risks during illnesses or unexpected life events. Mortgage insurance reduces this risk by protecting a most significant asset: their home. Additionally, as some self-employed individuals work from home, having their rent or mortgage covered supports the continuity of their business.

With mortgage insurance, self-employed individuals can:

• ensure their monthly rent or mortgage repayments are settled while they can’t work
• feel relief that their family won’t be burdened with heavy mortgage repayments or risk losing their home during difficult times
• access additional financial support for nursing care, rehabilitation, and other expenses.

Be self-employed and financially prepared with Policywise

Policywise is a 100% free service which tells you which health, life, and disability insurance provider best fits your needs. We offer fast, comprehensive, and easy-to-understand comparisons of all leading providers, and a simple summary clearly recommending which insurer is best for your situation.

Not all insurance policies are the same. Policywise can help you sort out the duds, avoid the lemons, understand the fine print and exclusions, and get the right insurance for you and your family.

We make the important decision of where to buy your insurance super easy. We’ll answer your questions, provide experienced advice, quotes, and comparisons, and manage all the back and forth throughout the application process. Taking out your cover through us means you'll have our lifetime support and claims advocacy, and we'll help you negotiate a positive outcome at claim time. We can also take care of lodging any claims on your behalf and back you up if the going gets tough.

Check out the reviews on our homepage for how other self-employed New Zealanders have found our service, because now is the time to get your self-employed personal insurance sorted. Give your family or someone you love the most outstanding financial support possible. Book a 5-minute callback with Policywise today; our service is fast and free.

^{Disclaimer: This article is for general information only. Nothing in this blog or on this website is intended as medical, dietary, or financial advice. Although we aim to update our content regularly, you are advised to consult a Policywise adviser, health professional, or an appropriate specialist before acting on any information herein. They can factor in your personal circumstances or preferences and help guide your decision-making process.}