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In these tough economic times, it's tempting to cut costs by cancelling personal insurance. But before you make that call, consider some alternatives! Lance has some suggestions that could be the difference between a wise move and a hasty one.
We know we need personal insurance; after all, we’ve been paying for it. We feel safer having it in our back pocket should we need it. Sadly, many of us have friends and family who have been seriously sick and have been able to use their insurance to help get them through tough times, or they wished they had had cover when they needed it.
However, the wheels have fallen off the economy. Mortgage interest rates are still high (but coming down), the cost of living is high, and employment is tough. So, we start looking for places to reduce our costs, and personal insurance finds its way to the top of the list, again! The temptation is to cancel what we are not currently ‘using’ so we can put that money into groceries, petrol, and things that we 100% use daily. As a financial adviser, I get it; we have a certain amount of money coming in, and we need to make sure we have less money going out.
When was the last time you looked at what cover you actually have? Is your situation the same as when you first took the cover out? Have your debt levels lowered, allowing you to lower your cover? Have your children grown up and left home, making the life insurance you took out to ensure they were looked after no longer needed? Going through this exercise could not only save you money, but it might also serve as a reminder of why you have the cover in the first place, confirming that what you have makes sense for your needs and should remain the same.
As often is the case, different companies offer different types of cover and benefits, and with this comes a difference in cost. Prioritising what is essential cover for you and your family, then finding the company that best fits your requirements, could result in a lower cost outcome.
Did you know you can actually put your cover on hold for between 3 to 12 months? The benefit of doing this is that you save money, and when you put it back in place within this timeframe, they do not ask you to answer all those health questions again, like they do when you first take out the cover.
What you need to be aware of is that you are not covered while you are on hold. So, should something happen that you need to claim for, you will not be able to do this, so you really need to make sure this is the best decision for you. As always, not all insurance companies are created equal; there is at least one company that would still cover you for some of their products even while you are on hold for 3 months, which is incredible!
You do not need to put it all on hold either; you could put some on hold but keep some of your other cover in place.
The key is to spend some time looking at what you have and talk with a professional to confirm which options work best for your personal circumstances. Then continue to review annually to make sure it always reflects your needs. This also gives the opportunity to confirm whether there were some claims you are able to make, as well as keep up with some new offerings insurance companies have that may suit you and your needs.
Lance.
About Lance
Hi, I’m Lance a Financial Adviser here at Velocity Financial. People in Finance love to make it all seem too complex. I see my role as removing these barriers, opening your opportunities, and connecting you with the sharpest and most helpful professionals Wellington has to offer. I am interested in people and enjoy being part of key (and often the most stressful) stages in their lives. From my background in heading up large social development projects, finding finance and resource to bring about change for some of our most vulnerable New Zealanders, to my role as a marriage celebrant helping organise one of the most dramatic, stressful, wonderful, precious days of people’s lives. Now as a Financial Adviser I'm able to help people reach their financial goals and help provide security by insuring them against life's challenging times. I love being active, boxing, running, surfing, basically if there is a chance of some form of activity I am on board. Music is extremely important to me, and I have been privileged to travel around many parts of the world playing drums.
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Disclaimer: Lance Shearman (FSP431426) is a Financial Adviser with Velocity Financial (FSP95466). No investment decision should be taken based on the information in this blog alone. Please see Lance’s disclosure statement on our website.
Always get professional advice
The information shared in this post is meant to be general guide to support you on your journey. When making important decisions about your finances, we encourage you to seek independent financial advice first, tailored to your unique situation. As well as talking with a financial adviser, make sure you talk to your lawyer and accountant too – together they'll help you find the best solution for your specific situation. Our knowledgeable financial advisers are here to help. Check out our website for the details about our financial advisory services in our disclosures:
https://www.velocityfinancial.co.nz/disclosure-statement.