WealthDesign

Do you know what happens with your ACC if you get hurt and can’t work again? You pay your levies just like anyone else but if you are hurt in an accident and off work long term, you are discriminated against at claim time.

First year on claim you would get 80% of your salary and the National Superannuation payment.  Year two, either 80% of your salary or National Superannuation payment, but after year two you only get the National Superannuation payment.

Is this fair?  Doesn’t appear so to me, but it’s the rule that applies today.

If you are over 50 and plan to work longer than 65, give us a call and talk about your risk planning.

We’re here to help – we make the complicated simple.

John Barber

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In New Zealand we are fortunate to have a world class accident compensation scheme. We all hear the sad stories of ACC not meeting people’s expectations, but it is still a great scheme in my opinion, and has many benefits.

At present we are seeing a lot of insurance advisers giving blanket advice to reduce ACC and take out private insurance. In some cases this is prudent, especially if your income would continue in the event of a period off work i.e. dairy farmers. But it’s not for everyone and this is where I get concerned.

ACC pays out after seven days versus private insurance that pays only after 30 days off work (at best). ACC covers you even if you have risky hobbies such as motor sport or mountaineering.  Most private insurers would exclude these types of hobbies. ACC also has an accidental death benefit built in as well.

The other thing we see is clients with back and knee exclusions on private cover, and advisers suggesting reducing ACC, just based on a short term premium savings on ACC. This doesn’t always bring about the best outcome.

ACC is a complex product and needs specialist advice.  Before you change ACC because of a sales pitch, ask for a written report, as for the proof that the person actually knows ACC in depth.   Make sure you are talking to someone who really knows the complexities of ACC and not just someone using ACC as a way to make a sale.

If you want quality ACC advice, or you want to double check what you have had recommended, give us a call and we can refer you to a firm that does nothing but handle ACC. 

John Barber

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Spike Milligan once said “All I ask is the chance to prove that money can’t make me happy”.   While most of us would not consider having financial wealth as an automatic ticket to health and happiness, there are subtle connections. People who are financially better off often use their money to access better health care and advice.  People who suffer poor health are sometimes financially poorer because of extra health costs and limitations on their ability to produce income.  As a result of stress and worry their happiness suffers also. People with good health tend to have more financial resources, because the reverse is more or less true too.  Which one comes first is moot, but the link is becoming clear. 

In our role as ‘financial coach’,  we help you build as well as protect your financial resources.  We want to make sure you can handle a period of limited income and extra cost if you suffer ill health.  And we know a few shortcuts. The prudent use of insurance can fill the gap between having enough financial resources to access better health care, and being self-sufficient.  Insurance can ensure that a prolonged period of limited income is no threat to your household. 

We teach people how to reduce stress and worry.  We help people to be their own version of wealthier, healthier, and happier.  

Regan Thomas

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The IRD have come out with a warning about insurance payments in the event of a claim.  If you receive any insurance payments, tax could be payable on it.

If you’re a business or rental property owner, you may need to declare some insurance payments in your income tax and GST returns. These could affect the amount of tax you should legally pay.  For example, the following insurance payments are taxable:

•loss of profits

•loss of rent

•reimbursement of business expenses

•destroyed or depreciated assets.

Some common mistakes include not declaring insurance payments as income, not accounting for GST or not returning depreciation recovered when the payment is for a depreciable asset. Another area that one should consider is the payment of loss of revenue cover.

To avoid errors, you should keep all records relating to insurance payments for your business or rental property or ask your accountant or tax agent for help with this issue.

The Christchurch disaster has made the IRD aware of this and they now have insurance payments in their sights as a source of tax avoidance.

Any questions you have regarding your unique situation, please give us a call.  We make the complicated simple!

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In the budget this year the government announced funding for health would be a record $15 billion.  And we expect it will continue to see new records in the years to come.  Under 13s will now get free GP visits and prescriptions too, and more money is being allocated to things like bariatric surgery, elective surgery and colonoscopies. 

Sounds good huh?  Tell that to the people who are still waiting to get onto a waiting list.

A study by TNS Research showed around 280,000 New Zealanders were in need of elective surgery, with public waiting times commonly in excess of 12 months.  The government’s statisticians will tell you there are 110,000 people on waiting lists.  This means another 170,000 are not even on the list!   So while the kids may be able to get to a GP even after tea time, mum or dad might not find it so easy to get surgery. 

Health insurance, ACC, and personal payments provide more than half the elective surgery in this country, and the trend over successive years has been for more and more surgery to be funded outside the public health budget, no matter how big it gets.

Further reading here at the Health Funds Association annual report, published this week.

http://www.healthfunds.org.nz/pdf/2014%20annual%20review.pdf

Regan Thomas

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