personal insurance

A Quick Guide to Personal Insurance

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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

Free Range Kiwis?

Lance discusses why, when it comes to personal insurance, a little outside input can go a long way, even for us number-eight-wire minded Kiwis.

 

Us New Zealanders are travellers and pioneers. Our ancestors are people who were not content with what was put in front of them so set sail and explored. We explore new horizons and opportunities. 

 

Thanks to this pioneering mentality, we tend to have also a “do not tell us what we have to do” (or cannot do!) type attitude. We like options, we are free range Kiwis and we like to make decisions based on investigating what is best for me and or my family.

 

I read an interesting article in the Dom Post recently entitled “Who Needs an [Insurance] Adviser Anyway”. It spoke on the importance of finding an adviser who can offer  professional advice which will meet the specific needs to a client. It emphasised the massive benefit of having an adviser who has access to a wide variety of insurance providers and who takes the time to explain the technical aspects of personal insurance cover and how it works.

 

This article also highlighted the importance of choice. If you purchase personal insurance from the bank, for instance, they will generally only have products from one company to squeeze your individual needs into, and they often present only a watered down version of that one choice!

 

Banks are amazing sales people, they have to be, but personal insurance isn’t a one-size-fits-all business so it pays to channel that pioneering and adventurous spirit into seeking out an insurance adviser that can lay out some good options on the table.

 

So here’s some advice for Kiwis on the hunt for personal insurance:

 

1. Speak to a professional insurance adviser. Have them find out about you, your current situation as well as future plans.

2. Let the adviser display the options and find the insurance company that best fits you.

3. Review your insurance strategy annually to make sure your cover is exactly what you need and make any appropriate changes.

 

Lance Shearman 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.