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Is your personal risk insurance cover coming up for review? If the answer is yes, there are some things you may want to consider making sure your policy is still the best one for you, going forward.
Firstly, if you don’t have personal risk insurance, let’s have a conversation, and soon!
Let’s talk 101 for a minute. Personal risk insurance is cover against illness, accident, death that would prevent you from earning a living and paying your debts. Whatever the risk, chances are there’s an insurance policy available to reduce the financial loss you would take, should the worst occur. Below is the usual cover available in this area:
Life Insurance will provide your family with a lump sum of money in the unfortunate case of your death to protect them against the financial burdens and hardship that might otherwise follow.
Total and Permanent Disability (TPD) Cover provides a lumpsum payment should you completely lose your ability to ever work again (or carry on your normal tasks, if you are not employed), as a result of illness or injury. TPD Cover is designed to help alleviate the significant financial impact that losing an income forever would likely cause.
Trauma Cover provides a lump-sum payment should you suffer one of the Covered Conditions listed by your provider. These could range from Cancer, Strokes, Heart Attacks, through to Dementia. The Covered Conditions are by nature serious and potentially life-threatening and, as a result, can have a significant financial impact. Trauma Cover is designed to help alleviate this financial impact.
Income Cover provides a financial safety net should you be disabled as a result of sickness or injury, and unable to earn your regular income. The monthly benefit is designed to replace a significant portion of lost income to help maintain your usual lifestyle during treatment and recovery.
Health Insurance provides the funding to enable you to have private medical treatment whenever you require more immediate access or a broader range of treatment options than what is available to you through the public health system.
So, let’s assume that we have had that very important conversation and have some cover in place for you. Phew! (Still not sure if you need that cover? Check out this blog for some more compelling reasons..)
Each year, by way of the insurance company getting in touch, as well as Velocity Financial sending you an anniversary letter, you will get a heads-up on the cover you have in place for the upcoming year and the cost breakdown for the covers you have.
Great – so you are still covered. So why do you need to read and review then? Can’t you just keep paying the premium and truck on?
If there has been a change in your circumstances, be it a change in job (or career – moving from PAYE to self-employed), you have had anew child (or had one leave the house), you got a mortgage (or no longer have one,) or stopped smoking or vaping, your current cover may no longer be fit for purpose.
If there has been a change in your circumstances from last year, your cover may no longer be fit for purpose.
It’s an important thing to consider, to ask yourself, if something happened and I was unable to work, would I/we be, OK? If it was an accident that took you off work, ACC would come to the party, yes. But is that going to be enough?
Consider this. A very small percentage of people off work are because of an accident. More than 70% of those off work are due to serious illness.
Most claims are around mental health and back issues (sacral spine is a common ailment). And there is no ACC cover there.
If the unthinkable happened and you were no longer around, is what you set up years ago before you had mortgage debt, kids, partner, and a business, going to be what you want left behind?
Some tough questions to think of there. We get it.
There are ways to tweak your cover and make slight adjustments, based on your current circumstances and looking forward, as to what you might need to have in place. These adjustments can have a significant difference on the premiums, and it is not always an increase either!
There are also added benefits to doing a review. Some companies will incentivise you with staying active and looking after yourself (for example, doing your daily steps, getting check-ups when you should have check-ups, etc) by offering discounts on premiums. Some companies also offer lots of built-in benefits, some with multi-benefit discounts, and some will give you a like-for-like switch and save up to 20% on the premium, for the life of the policy.
Hunting though this information yourself can be a bit daunting, so this where your insurance broker is golden and can do the legwork for you.
Another key consideration here is who actually owns the policy. If you and your partner have cover and are each other’s policy owners, this gives you the ability to act on their behalf, with the broker, to work through the logistics and paperwork in getting the claim in place and paying out.
If you’re incapacitated, having a joint policy ownership eliminates some of the red tape with them being able to act on your behalf. If you're requiring ongoing medical attention, having this in place is one less thing for you to worry about and you can concentrate on getting better.
There are lots of options and lots of reasons to ensure that what you have in place is still works. Sure, you’re bulletproof now, with no family history of bad stuff, you eat well, exercise, generally take care of yourself….
The insurance is there as a “what if.” And in our line of work, we’ve seen plenty of those.
Reach out and let’s do a check up on what’s in place. Afterall, it's not about having insurance, it’s about having the right insurance.
Simon.
About Simon
Hi, I’m Simon a Financial Advisor here at Velocity Financial. I enjoy working with my clients to help demystify all the Mortgage, Insurance and KiwiSaver fine print, and help get them to where they want to be. I am dedicated, thorough and offer professional advice that works for you. I like to help people on their journey and be a trusted person to guide them through really important events in their lives such as the home buying process. I help my clients collaborate with valuers, builders, lawyers and real estate agents to ensure a seamless experience. That satisfaction of reaching the goal with the least amount of stress for my clients is hugely rewarding. I navigate unique scenarios and tailor lending solutions for individual circumstances to save money and time. As a proud father of two and avid supporter of all my children’s endeavours, I know just how precious that time is. On the weekends you’ll also find me mountain biking, surfing, or checking out NZ’s great walks.
Disclaimer: Simon O’Neill (FSP534466) is a Financial Adviser with Velocity Financial (FSP95466). No investment decision should be taken based on the information in this blog alone. Please see Simon’s disclosure statement on our website.