financial protection

A Quick Guide to Personal Insurance


Insurance can get confusing. Huge policy documents, insider lingo, fine print everywhere. It’s supposed to provide peace of mind, but can instead just play havoc with even the sharpest samples of grey matter.

So, here’s a 101 guide to understanding your personal insurance.


In New Zealand, there are four things a person can insure themselves for:


1. Life


Why? To repay debts, cover funeral costs and give your loved ones the financial freedom to properly grieve.


Who? This pays a lump sum to your estate or the person of your choosing.


2. Trauma


Why? Give yourself space to recover, whether or not you’re off work for a prolonged period of time.


Who? This pays a lump sum to you if you are diagnosed with a specific illness.


3. Income Protection


Why? Unfortunately the bills still come in if you’re unable to work due to injury or illness. This will pay a percentage of your income (or mortgage repayments) until you’re able to return to work.


Who? This pays you a monthly sum.


4. Health


Why? If you need non-acute surgery, you can skip the public queue and go straight to a private hospital.


Who? This pays the medical professionals that are looking after you.


Finally, it’s important to ensure that your cover is relevant to your life. Here are a few examples of life events that may impact the relevance of your cover. If any of these apply to you, give us a call!

•          You have new additions to your family

•          Your kids leave home

•          You get married and/or divorced

•          Your job changes

•          Your salary changes

•          You have had any health issues (more than just a GP visit)

•          You have set up a new company or trust

•          You have bought or sold a property

No investment decision should be taken based on the information in this blog alone

What are Your Chances of Needing Insurance?

Do you actually need personal insurance? And what are the chances that you are unable to work due to illness or injury? Graham, our resident stats man, tackles these big questions head on.

I just finished another conversation with a client around how to pay their mortgage off quickly and then how they can buy another property in the next three years. We talked about their personal budgeting in order to manage expenses but we also talked about their ability to continue to earn an income.


At this point in the conversation—the point when the topic of personal insurances arises—many clients’ eyes glaze over and they switch off. Ultimately, it’s a case of "it will never happen to me” syndrome. 


So what are the chances?


If you are a couple aged 30 or upwards, there is a 17 per cent chance that one of you will die before the age of 65. Slightly under 10 per cent chance one of you will suffer a total or permanent disability before 65 preventing you from working again. 25 per cent chance that one of you will suffer a critical illness e.g. cancer, heart attack, stroke. 27 per cent chance that one of you will take at least six months off work before the age of 65. 


These figures may sound a little high but if you have a quick look around your circle of friends or your parents’ friends and make a list of people who have been affected you’ll realise that they are actually pretty accurate. And for a little under three per cent of your annual salary you can financially protect you and your family to lessen the impact if one or more of these events occurs.


The figures are the figures are the figures!


Give us a bell today to chat about insurance options for you and your family.


Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.