Insurance for sharemilkers

Sharemilking is one of the more misunderstood positions in New Zealand insurance, because on paper the sharemilker looks like a contractor and in practice they carry the risk of a substantial business. A 50/50 sharemilker owns the herd, employs staff, buys feed and takes the production and payout risk, without owning the land that would otherwise be the security behind all of it.

That produces a specific financial shape. The debt is large — a herd loan and plant finance can run well into six figures — and it is secured against livestock whose value moves with the market. The income is volatile, because it depends on payout, production and the season. And the position itself is contract-length, with the possibility of moving farms at the end of a season.

The physical risk is farming risk: machinery, stock, motorbikes and quad bikes, early mornings, long days through calving, and the constant time pressure of a milking routine that does not pause because you are unwell. ACC covers the accidents. It does not cover the illness, and a sharemilker who cannot milk for six months has a problem that milk cheques and ACC will not solve.

Two structural decisions matter more for sharemilkers than for almost anyone else, and both are made at application.

How the benefit is calculated

Indemnity income protection works out your benefit from proven earnings, usually over the twelve months before a claim. If that twelve months included a low payout, a difficult season or a year of reinvestment, the benefit shrinks accordingly — even though the herd loan repayments did not. Agreed value cover, where it is available to your occupation class, fixes the figure at the outset.

Which ACC product you are on

Standard ACC CoverPlus calculates weekly compensation from your last filed liable earnings, which has the same problem in the same seasons. CoverPlus Extra lets you agree an amount with ACC in advance and be paid that amount without proving income at claim time. For a self-employed sharemilker with variable earnings this is usually the more sensible setting, and it is a conversation with ACC, not with an insurer.

These are the details that decide whether the cover does what you expected. Read them before you compare on price.

• Whether your total debt — herd, plant, vehicles, seasonal finance — has been counted in the sum insured.
• Whether income protection is agreed value or indemnity, and what financial evidence is on file.
• Your ACC setting, and whether the CoverPlus Extra amount still matches what you actually need.
• Whether the contract structure means a partner would be expected to continue the contract alone.
• What happens to cover if you move between farms or step up to an equity partnership.
• Whether cover is owned personally or by a company or trust, and how that affects who receives the money.

Every New Zealand insurer writes cover for sharemilking to its own wording, and the words are where the money is. Two policies that look identical on price can pay very differently when it matters. Closing that gap is the entire job of an adviser.

• Sizing cover against livestock and plant finance rather than a mortgage is a different calculation, and it is regularly missed.
• Agreed value income protection is not available to every occupation class or from every insurer, and for volatile income it is worth chasing.
• An adviser can coordinate personal cover with your ACC CoverPlus Extra level so you are not paying twice for the same accident risk.
• As sharemilkers move toward equity partnership or farm ownership, the cover needs restructuring rather than topping up.

There are three ways to buy life cover in New Zealand, and they are not equivalent. You can buy direct from one insurer, which means you see one product range and one underwriting appetite. You can buy through your bank, which usually means a single insurer’s product sold under the bank’s brand, often with narrower definitions. Or you can go through an adviser, who quotes several insurers at once and is required to put your interests first.

The premium you pay is the same either way. Insurers build adviser commission into their pricing whether or not an adviser is involved, so going direct does not get you a discount — it just removes the person whose job is to argue your corner at application and at claim time.

• An adviser can see which insurer is currently taking your health history on standard terms, and which one will load or exclude it.
• An adviser can structure cover across two insurers if that produces a better outcome than putting everything with one.
• An adviser handles the underwriting back-and-forth, and is the person who chases the claim when a family is least able to.
• An adviser has to document why the recommendation suits you, which is a written record you can hold them to.

We are a referral service, not an insurer. We do not quote premiums and we do not sell policies. What we do is put you in front of one licensed New Zealand adviser who can compare the market properly.

1. 1

   You tell us what you are looking at

   The form takes about a minute. Nobody asks for your medical history on a web form — that conversation happens with the adviser, properly, and only once you have decided to proceed.

2. 2

   An adviser calls you

   A licensed New Zealand adviser talks through your situation: who depends on you, what you owe, what you already have in place, and what you are actually worried about.

3. 3

   They compare the market

   The adviser quotes across the major insurers, checks which of them will take your health history on the best terms, and puts the options side by side in writing.

4. 4

   You decide, in your own time

   There is no obligation and no cost to you. If the answer is that you already have enough cover, a good adviser will tell you that.