Insurance Chat
Your quarterly guide to all things insurance, dispelling the myths and answering your questions so you can make an informed decision on your insurance needs. We look at the importance of protecting your income and learn how you can keep your premiums becoming too unaffordable.
The vast majority of Kiwi’s are underinsured with NZ being one of the lowest insured nations in the OECD. Virtually everyone insures their houses and cars, but when it comes to our most valuable assets – our health, families and income - we’re at huge risk of suffering severe financial hardship in the event something unexpected happens.
Do I need to protect my income? Being out of work for life is a far greater financial disaster than your house burning down or crashing your car. How many weeks or months could you survive financially if you were down one income? Research suggests most Kiwi’s would last no longer than 4 weeks. ACC only pays out if you have an accident, not an illness such as cancer and you are expected to return to any job you are suited to even if it is vastly lower paying than your previous job. Additionally, benefit pay outs are highly unlikely to be sufficient to sustain your existing lifestyle.
With income protection available to cover all or part of your mortgage, rent or even your day to day household expenses, it’s worth the relatively small monthly cost for a lifetime of peace of mind.
How can I keep my premiums from going up? Your premiums increase with age as the odds of you falling ill rise. Unfortunately there’s not a lot you can do about this! However, there are some things you can do to keep your premiums from being completely unaffordable as each year passes:
Review your insurance annually – as you reduce debt and your children leave home, your need for certain types of cover may reduce. Ensuring you review your cover annually will mean you aren’t paying more than you need.
Increase your excess – whether it’s home, contents, car or health insurance, you can increase your excess to reduce your premiums. This is a particularly effective way to keep private health cover premiums in check as you age. Have a small amount set aside to cover your excess if and when you need it so you have nothing to worry about when you need to make a claim.
Consider specialists & tests only vs full private health cover – this is a better than nothing approach whereby you can drop the surgical and hospitalisation benefits to significantly reduce your health insurance premiums. Visiting a specialist or having the necessary scans and tests through the private health system is covered, but if you need further hospital treatment or surgery, you’ll need to join the public system and potentially sit on a wait list.
Loyalty discounts – some insurers offer a loyalty discount, the longer you stay the higher the discount.
Shop around – if you’ve just received a huge hike in premiums, now could be a good time to look around at what else is out there. However, often with insurance the less you pay the less you get so ensure you stick with a reputable insurer with a good financial strength and high claims payout rating. Also check the 10 year premium projection in your quote as they might seem cheap to start but end up being higher than your current in the long run.
Pay annually rather than monthly – some insurers will offer a discount if you pay your premiums annually, this is particularly applicable to house, contents & car insurance as well as some life insurance companies.
If you have a question you’d like answered or have a story to share, we would love to hear from you so please get in touch.