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Like many women, being independent is important to me and to a greater extent than is good for me at times! While I’m working on being better at asking for help, being dependant on others in any way still leaves me feeling insecure and anxious. For anyone who has had a relationship where money was a source of conflict, or a relationship breakdown where you had to start again from scratch, this is often heightened, even when you move into a secure, healthy space.
Knowing how I felt when I was on maternity leave and had to rely on my partner’s income, I know that if in the future I’m unable to work for any reason I want to have a safety net to fall on rather than being purely dependant on his earnings. I was made redundant in the past so I know I can job hunt and even shift careers if necessary; and if I injure myself ACC will step in, but if I get sick and can’t work? That’s a different story, and I don’t want mine splashed across a Give a Little page…
I am fortunate enough to have a mortgage, two young children, a husband, a career ahead of me and plans I want to protect. To do that I have Life, Trauma, Income Protection and Total Permanent Disability Insurances. In my case I also have an autoimmune condition which can be crippling when not managed and which has rendered me (at the ripe old age of 33) uninsurable for any further income protection insurances. I am painfully aware that some point in my future I may not be able to work full time or be as active in the household as I am now. The idea that I may lose some of my independence frankly scares me, and my first point of call is to look after my health as much as possible, but beyond that I want to know that I won’t be a financial burden on my family.
Worryingly, the Financial Services Council completed a survey that found 70% of respondents were underinsured; only 11% had income protection insurance and 18% had Trauma cover. Life and Health insurances have a better take up, possibly through better understanding of how they work, but for when a serious illness strikes, they won’t replace your income or pay down the mortgage.
Trauma cover and Income Protection are my two biggest recommendations to women who often have careers and families and nothing to protect themselves financially if they become seriously ill.
There tend to be three main objections to insurance – we hear them every day, but odds are you have thought at least one of these yourself.
Everything does right now if we’re honest! Insurance has traditionally been referred to as a ‘grudge purchase’, something you pay for but hope never to claim on. When I think of the impact on my husband, my kids and my own quality of life if I got sick however, it seems like a worthwhile protection strategy. Industry guidelines say that 3% of your income should get you a comprehensive insurance package, but if that’s outside the budget right now something is always better than nothing, and an adviser can help you work out which cover to prioritise or how to keep the premiums affordable.
This is a common impression and absolutely it’s important to ensure you understand what you’re covered for and there can be some fine print to navigate; this is another area where an adviser can add some value by making sure you know exactly what you can claim on and by advocating for you at claim time. Overall, though, the insurers we use have high claims statistics. Looking at NZ’s largest personal insurer for example, 94% of all claims received were paid out, with $96million paid out just in Trauma claims for 2021.
It’s confronting to think of being so unwell that you can’t work, or being financially dependent on your partner when you are fit and healthy and getting on with your life. We know though, that 1 in 9 women will be affected by Breast cancer in their lifetime, 1 in 3 women will be affected by mental health issues, and while heart disease is more common in men it is actually the leading cause of death in women.
Insurance is often on the ‘to do later’ list and doesn’t feel like an urgent issue. What people forget though, is that you don’t have to have had a heart attack or have been diagnosed with cancer for it to be an issue when you apply for insurance. All it takes are symptoms that may increase your risk of developing those conditions and the insurance company can offer you altered terms when you apply.
This is why putting protection in place when you are fit and healthy is the best time, you want to get the most comprehensive cover you can! While claims may peak around age 50, it is key that you get the cover in place in your 40s or even 30s while you have a clean bill of health.
If you don’t have anything, please do reach out and at least get a quote. If you have some in place, make sure you understand what they are for and when you can claim. If you don’t really feel confident about it all then get in touch, and we can review your existing insurances. Worse than paying high premiums, is paying high premiums for the wrong products!
Do you have savings or investments that are accessible (not property or KiwiSaver) that might help you in the event of a health emergency? Do you have a revolving credit facility you can use to help bridge a short gap in income? If so, that might change your insurance needs. Do you have kids, debt, variable household income, high outgoings, or other dependant family members? Those are all factors too. It’s important to look at your life, and that’s our approach to assessing your level of protection required, it’s not one size fits all!
It’s fantastic to be independent, and helping women maintain their independence through tough times is hugely important to me; but the other side of that coin is making sure if something happens to your partner that they have ensured some financial support will come in and aren’t going to be entirely dependant on you! It might be an awkward conversation to have, but if your partner makes a financial contribution to the household now, you’re going to want to protect that if they become sick themselves.
Insurance needs to be seen as part of a sensible risk management strategy for your family rather than just another sales pitch from your bank or mortgage broker. Think carefully about how much risk you are willing to take on – and who aside from you is bearing the brunt of that risk. What would it cost your family to replace you and everything you do on a daily basis for them if you got sick? Maybe those premiums aren’t so outrageous – they’re just a downpayment on protecting your family and keeping some independence even on days you can’t get out of bed.
Elizabeth.
Elizabeth is the author of the monthly blog What Would She Do? A column for women, by women.
Disclaimer: Elizabeth Tsikanovski (FSP693611)is a Financial Adviser with Velocity Financial (FSP95466). No investment decision should be taken based on the information in this blog alone. Please see Elizabeth’s disclosure statement on our website.