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Is insurance only for those in paid work?

Does someone not earning an income need personal insurance cover? We believe they do.

Your ability to earn an income is your greatest asset, and as such should be well insured. However, in certain of periods of life there may be a spouse who is not in paid employment – this doesn’t mean they can’t or shouldn’t have insurance.

Why both spouses need personal insurance cover

While unpaid work is often undervalued it contributes enormously to a household in different ways, and the very real financial ramifications of a non-working spouse being taken out of action are only one part of the picture.

Let’s look at a fictional couple, Vic and Kelly, in their late thirties with three school aged children. Vic works fulltime and Kelly works part time as a teacher aide, so she can be home after school and in the school holidays.

To understand why Kelly should have cover, even though she is on a low income, let’s imagine what would happen if she was diagnosed with cancer.

  • Vic will have to take time off from work

If it is terminal cancer he is going to want to spend as much time as possible with Kelly and the children. If it isn’t a terminal illness, life will be turned upside down with treatments for at least a year. Depending on where they live these treatments may be a considerable distance from home.

Vic will need to take time off work to care for his wife and even when he can work, he may need to reduce his hours to care for the children when they are out of school. He has income protection, but it only covers him being unable to work if something happening to him, not his spouse.

So right away the family has lost or reduced their income at a time when they are going through some major stress.

  • Covering Kelly’s unpaid labour

If Vic is going to be looking after Kelly, who is looking after the children?

We had a client muse that they needed more cover for the stay-at-home wife than the self-employed husband as he would need to employ a nanny, cook, cleaner, PA and accountant to cover her absence.

Jokes aside, it is important to have a thorough discussion about the ramifications of the primary caregiver being out of action, and looking at different scenarios. Family and friends may be able to provide some support but, depending on your circumstances, you may need to look at paying someone to help.

  • Unexpected additional costs

Luckily for the family, in New Zealand the medical treatment is free. However, supporting Kelly through this time and caring for the family’s needs can throw up some new expenses – at a time when the household income has already been reduced.

This could include accommodation and travel if treatment is far from home and after school care or school holiday programs for the children. Kelly’s treatment will make her immune system vulnerable – if one of the children comes home from school with a virus she may need to go and stay in a hotel.

Added to the emotional trauma of the illness itself, this financial stress could make life much more difficult for the family.

So how do you mitigate the risk?

The easiest and most cost-effective way to cover someone who does not have an income, or has a low income, is by bolstering their trauma cover. While children are automatically covered on most trauma policies spouses are not, so each must have their own.

Trauma protection is a personal cover providing a lump sum payment in the event of a diagnosis of certain illnesses or if you experience specified injuries. Different providers have slightly different lists of illnesses or injuries, but all include cancer, heart attack and stroke. Injuries can include head trauma, burns or time spent in intensive care.

One of the benefits of trauma protection is you can use the lump sum pay-out however you see fit – such as reducing debt, covering living expenses, paying for alternative treatments or a holiday to recuperate.

You may be surprised at how little it can cost – $100,000 of trauma cover for our fictional Kelly would be less than $20 a month.

Talking to an adviser about your current life stage is the best way to make sure your family has the best level of cover you can afford when you need it. Take the time to discuss how much income each spouse would need if the other was unwell, or no longer around.

There are some income protection policies that include cover for a dependent relative, which is another good reason to talk to your adviser when choosing the cover that is right for you.

Need to talk about protecting your family? Call one of our advisers.

Insurance for spouse

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Do children need insurance?

When putting insurance policies in place, the first point of reference is always the breadwinner. However, it is so important to realise that none of us stand in isolation and that something happening to any member of your family is going to have a financial impact – including your children.

We explain why it could be sensible to consider trauma cover, health insurance and life insurance for your children.

Trauma Cover

Trauma cover pays out a lump sum payment in the event of a diagnosis of certain illnesses or specified injuries (more about trauma cover here.) The main advantage of trauma cover is that the lump sum payment frees you up to spend time with your family and potentially cover some medical costs.

Another advantage is if you have a trauma policy with certain providers, your dependant children are automatically covered.

Looking at Partners Life as an example, their policy provides trauma cover of $50,000 to dependent children, regardless of the parent’s sum insured (note, this doesn’t cover congenital conditions). The children can also keep the policy cover when they become independent. To receive this cover, children don’t need to be listed on the policy, and Partners Life don’t charge a premium for their inclusion.

This is a huge benefit of this provider’s trauma policy for parents of dependent children, and a real example of the value of working with an adviser who understands your family situation.

There are a number of providers that include trauma coverage for children in their policies, to varying degrees, so make sure you speak with your adviser to find the right one for you.

Health Insurance

With GP visits free to children under 13, getting medical cover for your healthy, active children may seem unnecessary. There are a few important reasons we think it is worth considering.

There are two key ways to look at health insurance for children; caring for them now, and thinking about the future.

The main advantage of health insurance for children while they are young is the quick access to specialist services and expertise, without the stress of having to go on a waiting list.

It also offers an advantage as your children grow. Getting health insurance for your children now means you are setting them up for later in life. With an aging population placing more and more pressure on our health systems, public medical care may look very different in the future.

When applying for insurance as an adult many people also find limits placed on their coverage by pre-existing conditions.

If you insure your children while they are young, fit and healthy, and they keep the policy when they reach 18 or 21 years old (depending on the insurer), they will not have any pre-existing conditions as the cover is already in place. This includes any major conditions or illnesses such as cancer or heart problems, but also smaller things such as allergies or asthma.

Life Insurance

Life insurance for children is something that no parent ever wants to think about, but it is worth discussing.

It is uncommon to get life insurance for children, but it is available. How much you can insure children for is very limited but is generally enough to cover funeral costs.

The reason it is worth considering is that insured children can take over the policy when they come of age and will have that cover in place. To increase the cover, they will need to go through the normal application process, but they are assured of the original cover, regardless of any medical conditions that have developed since they were originally insured.

Congenital Conditions

A last note to keep in mind is that most insurance policies don’t cover congenital conditions.

A congenital condition is something that you are born with, whereas a pre-existing condition is something that you have developed since birth. For example, a tongue-tie correction needed on a baby will generally not be covered, as that is something they were born with. A child that needs grommets inserted (one of the most common procedures for children, which helps prevent persistent ear infections, but often has long waiting lists at public hospitals) can be covered.

If you want to know more about the options for insurance cover for children, or check how your current policies provide for your family, get in touch with one of our advisers.

Should you insure your children

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Health: The importance of your relationship with your GP

Having a GP (general practitioner) you have a good relationship with is a vital part of your healthcare plan. While having health insurance in place is important, if you become unwell your GP will be your first point of call – so you need someone who understands your healthcare history and that you believe will make good decisions regarding your care.

The relationship you develop with your doctor should be based on trust, clear communication, honesty and respect. For you to get the best possible healthcare, you and your doctor need to work together.

How to find a GP

It is free to enrol with a GP in New Zealand, but you may have to pay for appointments. Doctors’ practices and medical centres are privately owned and set their own fees, but the cost of a visit will be lower if you’re enrolled with the GP, as the government subsidises the fee.

To find a GP you can look at your local district health board website, or the Medical Council of New Zealand to find one near you, but you may prefer to ask around for a recommendation. Many clinics have a number of different GPs working there, so if you don’t connect with one you have the option of trying another. A good tip is to tell the nurses at the clinic what you are looking for in a GP, as they have a good grasp of strengths of each.

Once you have found a GP you like, you may find that they are hard to get an appointment with. If you are able to book in advance and are flexible with times this will increase your chances of seeing the same doctor, but for urgent appointments it may be more difficult.

What to look for in a GP

You should feel like your doctor listens to you, explains things clearly and respectfully, and follows through on referrals and relaying test results.

To have an effective relationship with your GP you have to be absolutely open and honest with them – if you don’t feel comfortable with someone it is a good idea to try someone else.

If you have any ongoing health concerns or pre-existing conditions it is a good idea to ask your GP how much experience they have had with that condition and what their preferred treatments are. GPs are people too, and there can be conflicting opinions on some treatments and conditions, so you need to find a GP whose values align with yours.

GPs are generalists, so a good GP should be relatively quick to refer you to a specialist for anything out of the ordinary. Having a GP you like and trust means you can probably trust their recommendations of specialists as well, which can take some of the stress out of the next stage of the journey.

How to get the most out of your GP appointments

Unfortunately, GPs are stretched, so you need to get straight to the point – this isn’t the place to have a chat about the weather or the match last night! Sometimes you may have a few things to cover, in which case mention it when you make the booking as you may need to book back to back appointments.

You need to be honest about what you came for and not expect the doctor to read between the lines, or mention the real reason you came as you head out the door. No matter how awkward or embarrassing your situation may seem, they really have seen it all before. You also need to be honest about any medications, how much you drink or any recreational drugs – you can’t expect quality treatment if your doctor doesn’t know the full story.

Your medical records

Your medical record is kept with the GP you’re enrolled with, but any health professional involved in your care can look at it.

Did you know you can as well? When you apply for insurance the provider may want to look at your records. While you should always be open with your GP, you may not be aware of what they are writing down and how much emphasis they are putting on what you have said. You may find it worth checking, and if you feel you have been misrepresented you can ask if they will amend it. This can be particularly relevant with regards to stress being seen as a pre-existing condition – make sure your vent about the kids, the spouse and the mortgage hasn’t been misconstrued.

If you want to know more about health insurance and why we think you need it, even in New Zealand, read our blog here. We’ve also touched on our thoughts on getting health cover for children here.

If you want to talk to one of our advisers about getting the best health insurance cover, call us.

How to find a GP

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