Common Life Insurance mistakes
We are regularly asked to review the insurance needs of New Zealanders, in doing so have noticed a few disturbing trends. Many people are blissfully unaware of some serious issues within their existing cover.
Personal Income Protection
Income Protection is relevant to financially protecting many New Zealanders; it’s generally not suitable for tradespeople or people in physical occupations. The ACC offset clause that applies to this type of cover means that if you’re unable to work due to an accident and receiving 80% of your income from ACC, you could end up receiving nothing from your insurer.
With the right advice and income protection product, you can be covered by a benefit that pays out on top of anything you receive from ACC.
The whole reason you get insurance is to have certainty that you and your family are protected if the unexpected happens. Price, although still a factor in any buying decision, shouldn’t come before peace of mind.
Shopping around for the best products to suit your situation is a must. Have an independent adviser tailor an insurance plan that suits your situation and budget.
Indemnity Income Protection
This type of Income Protection policy requires you to prove your loss of income at claim time. Dealing with a serious illness or accident is stressful enough without having to go through the time-consuming task of digging up financial statements or locating pay-slips. Even if you are paying premiums based on an amount noted in your indemnity policy, there’s no guarantee that you will receive it.
We advise all of our clients to opt for agreed value income protection – as the product name states – your monthly benefit is agreed upon by you and the insurer, and the financial assessment is completed at application time, rather than claim time.
Stepped Premium Insurance
Stepped or rate for age is the most common life insurance premium structure. It’s affordable at a young age but begins to increase in cost as you age. Unfortunately, it starts becoming unaffordable for most people as they move into their late forties.
To ensure affordable premiums now and in the years to come, we advise that clients put in place a combination of yearly renewable and level premium insurance cover.
Medical Information Disclosure
To avoid a hindered or declined claim, we urge all of our clients to obtain a copy of their medical and ACC claim records from previous five years to reference to when completing their application form.
When a claim application is submitted to an insurer, generally the first step for them to obtain a copy of your medical history. Having this information on file saves time and stress.
Advice from a Finsol adviser comes at no cost. You’ll have access to all of the major insurer products, and an advocate to act on your behalf if you need a claim paid.
There are plenty of product quality comparison resources available. If you’re concerned that you and your family are not insured correctly, please contact us for a free insurance consultation.
This article contains general information and does not take into account your individual requirements. Before making any changes to your insurance portfolio, please seek advice from a professional insurance adviser.