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Understanding intentional and unintentional disclosure

Every industry has its jargon, and insurance isn’t any different! One of the key terms to know and understand in our industry is disclosure. What is it, how does it work, and what happens if you make a mistake?

What is disclosure?

When you apply for insurance cover, you have a duty of disclosure. This means that when you fill out an application, and in all communication with the provider or adviser, the information you give is full, true and correct. This is usually in relation to your personal and family health history, but also covers your occupation and leisure activities.

The insurance provider uses this information to underwrite your insurance – they need to know the full picture to make an informed decision on what they will cover. Basically, they need to know what they are signing up for.

Personal insurance, such as life, trauma and income protection, are guaranteed renewable. This means the insurer can’t just cancel the cover any time they want (unless premiums are not paid), so they only have one shot at accurately assessing the risk you pose. Unless you choose otherwise, they are guaranteeing to cover you for life – so it’s important they get it right!

While rare, if a claim gets denied it is usually the result of a non-disclosure by the client – even if the non-disclosure was accidental.

Be open and honest

Disclosure is a key part of making sure we choose the right policy and that you have the best cover possible.

When you purchase your insurance policy through a Plus4 adviser, our thorough process makes it unlikely you would forget to disclose anything. It may seem tedious at the time, but come claim time the thorough process up front means there shouldn’t be any problems.

Don’t hold back information because you are concerned it will stop you from getting insurance. It would probably come to light when you try to make a claim anyway. There are lots of different providers and policies available, and when we know the full picture we can choose the best provider, policy or combination of policies to get the most comprehensive cover for your circumstances. And for some conditions that trigger a claim, after a symptom free period you will be covered again.

Material non-disclosure

The main reason claims are not paid out is due to material non-disclosure.

Material non-disclosure means things that are relevant to the claim. For example, if you have a skin cancer diagnosis claim but didn’t disclose a shoulder dislocation that shouldn’t be an issue, however if you had previously had cancerous moles removed and didn’t disclose that, that may compromise your ability to make a successful claim.

Acting in good faith

While an insurer can void a policy in the case of intentional gross non-disclosure, we all know mistakes can be made and information can come to light during the claim process. In our experience, insurers act in good faith to try and differentiate between unintentional and intentional non-disclosure. Their goal is not to penalise genuine errors, but they do have to assess each case on its merits.

Unintentional non-disclosure – what can you do?

The first step is to speak with your adviser. When they have all the information, they can work with you and the insurance provider to see what pay out you are entitled too and to make sure all your policies are updated. 

It is important to remember that insurers do want to pay out on claims. The claims handlers are real people who hate giving bad news, and know the difference a pay-out can make in these major life events.

On a practical level, it can be more stressful, more work and more expensive for them to decline claims, so they want it to go as smoothly as possible. Insurance providers also want a good standing with advisers – we want to look after our clients, so should a provider get a reputation for declining claims we will become reluctant to recommend their policies.

Ongoing disclosure

One of the things that makes personal cover different to home, car or travel insurance is that it is guaranteed renewable. This means any changes in health to you or your family, your occupation, pastimes and so on are all covered post underwriting. So once you have your policies in place, if a parent has a heart attack, you take up sky diving or get a job working with wild animals, you don’t need to tell your adviser or insurance provider about it, unless you’re applying for new insurance or a top up to your current insurance.

Our advisers are passionate about looking after their clients, and making sure they have the cover they need, when they need it. Find one near you

Understanding disclosure for insurance
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Keeping your insurance cover in financially unsettled times

Many New Zealanders are suddenly finding themselves worried about their finances and in these uncertain times cutting costs can make a lot of sense. While it is not a good time to cancel insurance, there are some things you can do to help manage the costs.

Why you should keep the policies you have

With so much uncertainty out there, insurance is one of the only certain things we hold, and this becomes an even more valuable asset in times like these.

Some insurance providers are also responding to this unprecedented crisis with changes to what is covered in some policies – which means the terms of any insurance policies you already have in place may be the best you will ever have. If you cancel policies now and intend to replace them at a later date, you may also find yourself with exclusions you don’t currently have. If you, or a family member, were to have a new health problem this could impact your ability to get coverage.

How you can reduce your insurance premiums

There are a number of mechanisms that you can use to adjust your premiums, and there are pros and cons to each. The best solution for you will depend on a number of factors, including your age, your financial situation and life stage. That is why we always recommend talking with your adviser, as they can work with you to find the best solution to suit your needs.

Premium Holiday

Some insurance providers allow you to take a premium holiday. This means that if you can show you are experiencing financial hardship, they may waive your premium for a period of time, during which time you are still able to make a claim.

It is important to note that this can only be done once in the lifetime of your policy. 

Premium Suspension

A premium suspension gives a break from premiums for up to 12 months. During this time you cannot make a claim, but you can pick your policy up again with the same terms at the end of that period. As with the premium holiday, you can only do this once in the lifetime of your policy.

Some providers have added on criteria specific to COVID-19, with a 20% loss of income sufficient to prove financial hardship.

Reduce sum insured

Reducing the sum insured will also reduce the premiums you need to pay.

This can be a good mechanism to use if you are younger, as there are built in special event increases in lots of policies that allow you to increase your amount insured in the future without further underwriting. These include things such as a marriage or civil union, birth or adoption of a child, taking out or increasing a mortgage, a child starting full-time tertiary study, an increase in salary or purchasing property. Read more here.

Increase excess

Increasing the excess on some insurance policies is an easy way to reduce the premiums, but if times are hard you need to be realistic about what excess you can afford in the event of a claim. It is also important to find out if you will be able to reduce the excess again in the future.

Increase wait time

For policies, like income and mortgage protection, you can adjust the wait period before you start to receive a payout, which will impact your premiums.

How is Covid-19 covered?

Just because every loss, frustration and stressor of COVID-19 isn’t covered by insurance doesn’t mean nothing is. These are some of the ways you may be able to claim on policies.

  • Life cover: If you have life insurance there are no changes to what is covered – this means if life cover is already in place and the insured person dies from COVID-19, they are still covered
  • ICU benefit: Some people who contract COVID-19 may spend some time in intensive care. Most trauma policies include ICU cover, which is triggered after a certain number of days in intensive care, regardless of the cause
  • Chronic lung failure: Some long term health impacts of COVID-19 could be covered by trauma insurance
  • Income protection: If you became unwell and were off work for an extended period this could be covered under your income and mortgage protection policies
  • Redundancy: Some income protection policies have redundancy cover

It should be reassuring to know from a claims perspective it is business as usual (even if everyone is working from home).

Before you cut and cancel, or assume something isn’t covered, talk to your adviser. We want to work with our clients to get them through this. We really are all in this together.

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What happens to debt when you die?

When you take on a mortgage, use your credit card or get a new vehicle on finance, you know it is important that you can make the required payments and keep on top of your debt. However, people don’t tend to think about what happens to those debts when you die.

So, what does happen to your debts when you die? The answer is, it depends. It depends on the type of debt, the estate and your next of kin.

The Estate

To understand what happens to debt, you need to understand what an estate is and how it works.

When someone dies all their individually held assets, such as property, cars, Kiwisaver and other investments, become a part of their estate. Jointly owned assets pass to the co-owner, and do not become a part of the estate.

If you have a will you will have identified an executor, and that person will distribute the assets of the estate. Usually debts are paid first, and what remains is distributed to the beneficiaries of the will. If you die without a will (which is called dying intestate) an administrator will be appointed by the courts to administer the estate.

Any funeral costs or legal costs for managing the assets are paid by the estate.

Mortgage

For most people, this is the largest debt they will have in their lifetime, and because of the way mortgages are set up the bank will likely have “first dibs” on the estate to recover what is owed.

If the property is jointly owned, the surviving party will now be responsible for the mortgage. If this isn’t the case, the executer of the estate will need to use money from the estate to pay off what is left on the home loan. If there isn’t enough, they may have to sell the property to pay back the bank.

This is where life insurance plays a key role. If a home is jointly owned, or you will be survived by someone you want to be able to continue living there, making sure your life insurance pay-out is enough to cover your mortgage is a key factor in how much insurance cover you need.

Credit Card

As with a mortgage, the debt on a joint credit card will fall to the remaining party. However, an individual credit card will have the outstanding balance paid by the estate.

With the high interest rates on credit cards, keeping on top of the debt is important at the best of times, so if you find yourself with a lot of credit card debt it is important to put a plan in place to reduce this.

Finance arrangements

That car that is still being paid off, the sofa, TV or fridge on hire purchase, all need to be paid for from your estate. If there isn’t enough in the estate to do this, they may be repossessed.

Tax

If you die with tax owing this is considered a personal debt, so is paid from the estate. If you have business debts, and the business is in your name, this also applies.

Outstanding Bills

You will need to cancel or transfer accounts for phones, internet and power. If you transfer accounts the new account holder will be responsible for any bills owing. If you cancel them the estate will be responsible.

What is there isn’t enough?

Sometimes the debts owing are more than the assets available to pay them off. Unless someone was jointly liable for the debt (such as a co-owner of a property or business, or someone who has provided a guarantee for a loan) family members cannot be held liable to pay off debts. 

We work with our clients to make sure if the worst should happen their loved ones are taken care of. We look at the whole picture to make sure the level of insurance you have is just right for your circumstances. Talk to one of our advisers today.

What happens to your debt when you die
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Keeping you and your family safe over summer

When summer kicks off in New Zealand, so does the DIY and outdoor life that is an ingrained part of Kiwi culture.

Having the right levels of health insurance, income insurance and life insurance is an important part of caring for yourself and your family, but unlike a new bike or paddleboard they are a purchase you hope not to use. This means whatever your holiday plans, it is important to be aware of what you can do to keep you and your family safe.

Keeping children safe over summer

Keeping children safe is an obvious priority for parents all year round, but summer comes with unique hazards.

  • Who is watching the kids? When you have a large group of friends and family together it can be so easy to assume someone else is watching the children. The simple act of communicating “I’m popping inside now, so you are in charge of watching the children,” can literally be a lifesaver.
  • Driveways. All parents know that driveways are a major hazard for children. With summer guests, and groups of families and friends congregating at the bach there is a lot more coming and going. There can also be different people looking after the children (including some who may have forgotten just how fast a toddler can move), and time spent in different houses without the safe set-up and routines of home. If you are visiting a house with children, or someone is visiting you with theirs, make sure you know where everyone is before any car moves.
  • Water. Swimming in the pool, a lake, a river, or the sea is such an integral part of summer for kiwi kids, and going out on a boat is a real treat. Remember to supervise children at all times, know the nature of the water before you enter (how deep it is, how strong the current is and so on) and know your child’s limits. Watersafe has some great tips for any water activity.

Avoiding food poisoning

Summer brings warm, moist conditions – the ideal environment for pathogens to multiply quickly and cause food poisoning. This means you need to take special care when preparing, cooking, and storing food. Follow the clean, cook, cover and chill rules; and take extra care, especially when barbecuing.  

The Ministry for Primary Industries have some great tips for avoiding food poisoning.

Avoiding exercise injuries

Whether the panic of impending swimsuit season after a cosy winter of inactivity, or a New Year’s resolution to get fit, summer finds plenty of people leaping unprepared into a new exercise regimen.

While improving your fitness is a great idea for your long-term health, to avoid injury it pays to be sensible about how you start– this also increases your chances of meeting your goals.

  • If you have any pre-existing health conditions or injuries, you need to speak to your GP or physio before you start a new exercise programme
  • Start gradually; don’t try and make your first run in five years 10 kilometres. Starting slowly not only reduces your chance of injury, but increases the likelihood you’ll keep at it
  • Warm up. This is a key feature of staying injury free. ACC Sportsmart has some good warmups to get you started
  • To help you stay on track, make a programme, stick to it and mix it up with different exercises

Safe DIY

New Zealanders love to indulge in a bit of home improvement around the house or the bach during the summer holidays. And ACC hears a lot about it when things don’t go quite according to plan.

Before you crack into a new project check out ACC’s prevention tips here.

Safer Road trips

For lots of people summer means more time travelling on roads that are less familiar. Time with the in-laws isn’t the worst hazard of a summer road trip. AA has four key tips on their website for safe driving.

Most pertinent to summer road trips are minimising distractions, which means putting some thought into keeping kids entertained and fed, and being aware of your own tiredness. This takes planning; when you will travel, who will drive and when you will take breaks.

Share the load and be aware of when you are starting to struggle. There is no harm in stopping for an impromptu ice cream or brief walk on the beach, to wake yourself up and give your passengers a break too.

Remember to slip, slop, slap and wrap and have a wonderful – and safe – summer. If you want to make sure your insurance is up to date, or need to make a claim do get in touch.   

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Savvy insurance choice saves business

As an active, fit and healthy man is his 50s, James* didn’t expect a major health scare, so when he got a small cut on his finger, he didn’t think much of it. The cut didn’t heal as expected, and instead got steadily worse.

James had developed drug resistant cellulitis and was rushed to hospital. His condition was so serious that the medical team advised his partner that his children needed to come and visit him – he was in intensive care for eight days and his kidneys shut down.

Doctors recommended surgery, in a desperate bid to save his life. The family were advised that he had an 80% chance of losing his arm. Thanks to the work of an amazing orthopaedic surgeon James kept his arm and has made a full recovery. He was back at work, on light duties, in three weeks.

When James went into intensive care his insurance adviser, Peter Rickards, got a call from his partner at 10 pm on a Friday night asking how he was covered and what they could do. Peter visited the hospital every day, keeping the family calm and working to make sure the cover came through.

“James had a trauma policy with Partners Life, which is triggered by a five day stay in ICU,” explained Peter. “This meant that he had a pay out of $250,000, which meant his business could stay afloat while he was unable to work.” James also had income protection, but because he has a 13 week stand down on the policy and he was back at work controlling his company again within a month he was unable to claim on that policy.

James also had a trauma policy with another provider which didn’t pay out at all. “This provider had significantly poorer policy wordings which meant James did not meet the requirements for a claim – this is a policy we would never sell to a client for these reasons,” says Peter.

For James, this experience showed the value of the relationship he had built with his adviser, and that his trust in Peter to choose the right policies for him, was well placed.

For Peter it reinforced why he loves his job. “Advisers are empathetic and form friendships with their clients,” he says. “You need to work as a team with your clients and always have their best interests at heart, and this means being there when the rubber hits the road.”

Working in an industry that often comes under fire can be frustrating for insurance advisers who work passionately for the best interests of their clients. Peter says he is really proud of the profession and how advisers can improve their clients lives for the better. “We are not salespeople, we advocate for the best policies and getting the right amount of money to the right person at the right time.”

James is now back to sailing, running and diving.  And thanks to his foresight in protecting himself and his business from the unknown, he is back running his company.

If you are ready to have an adviser who is a passionate and dedicated member of your team, get in touch with one of ours.   

*name changed

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Smooth out premium payments with a level term policy

With the low interest rates currently available, you may find yourself with a little something extra in your budget. To get the most out of it, this could be the perfect time to consider getting a level term cover policy for your life insurance.

There are two ways you can set up your life insurance cover. While the cover you receive is the same, the way the payments are set up – and how much you pay over the long term – can differ. It is definitely worth learning more and considering your options.

What is a Yearly Renewable Term (YRT)?

Also called a Stepped Premium, this is the most common set up, and represents the vast majority of all life insurance policies. The premiums increase every year, due to both inflation and as the policy holder becomes more of a risk to the insurer. Of course, your sum insured will also increase each year, protecting it from inflation.

The advantage having a YRT is that upfront, when you first get the policy, you are paying the cheapest premiums. As many people first get life insurance along with a mortgage or a child, price is an important factor. The downside is that it just keeps going up, which can lead to people reducing or abandoning their policy – and then not having cover when they need it the most.

What is a Level Term?

With a level term policy, you have the same type and level of cover as a YRT policy, however the way you pay your premiums is different.

The premiums are locked in, and you pay the same monthly premium for the term of the cover.

The insurer is committed to providing you with the policy for the same premium for the fixed term. This doesn’t mean you are locked into that policy, however if you break it you will lose the cost saving advantages of the level term.

Level term policies generally don’t have the inflation increase options that YRT policies do (although some offer fixed indexation, generally 2% per year).  Considering a level term policy means being open to taking a long term financial view.

So how does a YRT policy compare with Level Term policy?

With a fixed term policy your very first premium will be roughly double what you would be paying for your first premium on a YRT policy. However, as the infographic below shows, over the term of the policy you are looking at saving a significant amount of money.

In the past it may have made sense to reduce cover as you got older and life circumstances changed. However, many people are having children later, those children are living at home longer, and with the increase in house prices people are paying off mortgages for longer.  And it isn’t just life cover – trauma cover is often tied in with life cover and with constant medical advances we are surviving medical trauma that we may not have previously, meaning we’ll be wanting that cover for longer.

Most insurers offer level term option alongside the YRT option but some may have exceptions in the fine print as to when they may raise the premium, which is just another reason it is always worth talking to your adviser as they know all the ins and outs of the different policies.

If the concept of a level term appeals but you are not sure about having all your cover locked in at the same level for an extended term, you can have a bit of both in the same policy. Setting a baseline of level cover, and then the rest as YRT gives you flexibility when circumstances change and you may wish to change your level of cover. This is an area where having an adviser to talk to can make a big difference to having the policy and cover that is right for you.

If you think a Level Term policy might be right for you, or just want to know more about how it all works get in touch with one of our advisers today.

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Let’s get uncomfortable

The ‘she’ll be right’ attitude is an interesting quirk of New Zealand’s culture, and is rightly celebrated. Just getting on with it, not getting too worked up, and believing everything will work itself out are great traits, but like all things there is value in moderation. We need to understand that there is a darker side to this attitude, and there are times when it is okay and other times when it isn’t.

New Zealanders seem to have a deeply entrenched fear of confronting difficult issues. This shows in the 1500 Kiwis dying annually without a will, New Zealand’s dismal suicide statistics, poor succession planning, only half of us having an enduring power of attorney, and having one of the most underinsured populations in the OECD.

So we think it is high time New Zealanders get uncomfortable and have those difficult conversations – we must balance living for today with preparing for tomorrow. And the beauty of getting uncomfortable now is that it removes a lot of stress around the future, and you can move on in the comfort of knowing that things have been taken care of.

Wills

No one likes to think about the world without them in it, however it will happen one day, and there are consequences to dying without a will. It is called dying ‘intestate’, and means the law determines who will inherit property and possessions, with it usually divided between parents, spouses and children. It takes longer, is much more stressful and may not reflect your wishes.

Taking the time to think about who you want to inherit your estate and how to make things as easy as possible for those left behind is an important process.

  • If there are children involved who would be their guardian? (Note: this person or people are not obligated to care for your children, but will make the decision on who will)
  • Beyond inheritance of your assets, are there particular items, such as jewellery or art, that you wish to leave to someone special?
  • Who will make sure your wishes are carried out? This is your executor and needs to be someone capable of handling this responsibility. If there is no one you think is appropriate you can choose someone independent to take on this role 
  • Saying goodbye – does your family know if you want to be buried or cremated? If you have any requests for your funeral you can include these in your will
  • Who would care for pets?

Succession Planning

Succession planning is important for any business but is absolutely critical for family businesses or family farms. Making sure everyone knows what is going to happen well ahead of time helps to manage expectations and means everyone knows where they stand.

  • Will someone within the family inherit or buy the business or farm?
  • Is there a trust involved?
  • What is the timeline for succession?
  • What rights or decision-making powers will other family members have?

These conversations can be hard to have, so you may consider engaging a specialist facilitator to lead the process.

Organ donation

In New Zealand we can indicate our wishes regarding organ donation on our driver’s license, however our next of kin still make the final decision. Make sure your feelings about organ donation are understood by the person or people that would be tasked with making that decision. You may also want to donate your body to medical research or science, and if so, it is important to make sure that your loved ones know why this is important to you.

Enduring Power of Attorney

Having a will is important, but so is planning for a situation where you are unable to make decisions for yourself, or unable to communicate those decisions. This is where enduring power of attorney (EPA) comes in. You can choose different people to manage your health and finances and you can list people that need to be consulted. If there isn’t an EPA in place your next of kin will have to go through the courts to be granted an EPA, which is a stressful process at what is probably an already taxing time.

Retirement savings

Statistics on retirement savings in New Zealand are grim, as is the long-term affordability of NZ Super. While it is never to early to start saving for retirement, it is also never too late and carefully selecting your Kiwisaver provider and scheme can make a big difference. Making sure young adults understand compound interest, the changing generational demographics of New Zealand and why they should start saving early is also important.

Mental Health

We all know things are bad in New Zealand but so often we don’t know what to do about it. Talking to someone you are worried about can feel confronting, and it might feel easier to just leave things be. She’ll be right.

There are a multitude of helplines available but there are also Mental Health First Aid courses, which give everyday people the skills and confidence to support people in getting the help that they need and some guidance in starting those conversations.

We are on your team

At Plus4, we are in it with you for the long haul and we want to help you prepare for the future, and this goes beyond just helping you get the best insurance policies in place. If you want us to recommend anyone to help you with any of these difficult conversations, get in touch

have important discussions to prepare for the future
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Meeting an adviser? How to get the most out of your meeting

When you work with an adviser to get the right insurance in place, we want it to be as easy and accessible as possible. This might mean we come to your place after hours, or that you come to our office – part of what makes working with an adviser so great is our flexibility. If you want to know how to prepare for meeting an insurance adviser there are a few things you can do to get the most out of the meeting, whether you are looking for life insurance, income insurance, trauma protection or just some good insurance advice.

Allow enough time

If you know exactly what you want, half an hour may be okay. However if you are using an adviser because you want to draw on their expertise and experience, you need to allow enough time to for them to get a good understanding of your current situation and how you see your life changing in the future. It is best if neither party feels rushed.

Be open with your disclosure

Disclosure is a key part of making sure we choose the right policy and making sure you really are covered when you come to claim.

Don’t hold back because you are concerned you won’t get cover – chances are it would come out when you try to make a claim and it could be denied. There are lots of different providers and policies available, and when we know the full picture we can choose the best provider, policy or combination of policies to get the most comprehensive cover for your circumstances.

Give us your full attention

Life is busy – and it can be hard to fit everything in. However, if we have a meeting together you need to be able to give us your full attention. You may find insurance boring, but it is important!

This means make sure the kids are in bed, turn the TV off, and put your phone on silent. This is a professional meeting, and even if it is at your kitchen table it needs to be treated as such – otherwise you may miss key information or forget to tell us something critical.

Be prepared

There are a few things you can have ready before we arrive. If you have existing policies, have those details ready for us. Having your personal income details or business accounts ready is good, as is a clear idea of your own medical history and that of your family.

Ask lots of questions

We absolutely love it when you ask questions and are open to learning more! This gives us a great idea of what you already know and what is important to you. We know our stuff inside and out, but we don’t expect you to, so there really are no dumb questions.

Make sure you can both be there

Whether you are getting insurance along with your partner in life or your partner in business, it makes sense for you both to be available, especially for our initial meeting. We need to know what is important to both of you, and we need to know about you as individuals.

After the meeting

After we have met with you, we may need more information or official documentation. Following up on this promptly and partnering with us to chase up third parties, such as your doctor, makes a big difference to how quickly we can get your cover in place.

Relax, we are a team

Lastly, remember that your adviser is on your side.

We are not there to sell you something you don’t want or need, we are there to work with you to put together a plan for your future. It is not about a particular insurance product, it is about the outcome for you if something goes wrong, and insurance is just one of the tools we use to get the best outcome for you. That is why we will likely talk to you about wills, trusts and enduring power of attorney as well.

Are you ready to get an insurance adviser on your team? Get in touch with one of our advisers today.

Prepare for your meeting with an adviser

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When life changes, make sure your insurance does too!

Change is the only constant in life, and as we move through life events and milestones we adjust and keep moving forward. But have you given any thought as to how changes in your life impact your insurance covers, and when you need to make changes?

At Plus4 it is important to us that you have the right insurance at the right level for each life stage – this includes making sure you are not over insured or paying for cover you won’t be able to use. To this end, we send out a letter every year to touch base with our clients to make sure their cover is still meeting their needs, but you don’t need to wait for the reminder.

What life changes should trigger an insurance review?

These are the changes we see most commonly; however it isn’t an exhaustive list – which is why it is always key to speak with your adviser to discuss if a recent change is a reason to adjust your type or level of cover.

Mortgage

Have you increased or decreased your mortgage? Your mortgage is often a starting point for deciding how much life or income cover you need, so if you have dramatically reduced your mortgage or had an increase it is time for a review with your adviser.

Relationship change

If you have a new relationship, or have ended a relationship, there are a number of ways this can impact your insurance covers. For example – who owns your life policy? Is the person that will be receiving the pay out still appropriate?

Increase or decrease in dependents

If your teenager has left home, a new baby has arrived or a dependent parent has moved in these are all worth discussing with your adviser, to review whether your cover should be increased, reduced or structured differently.

Employment

If you move into a dramatically different occupation it is worth touching base with your adviser to see how this may impact your covers and premiums. Likewise if you become self-employed, or become an employee after self-employment the types of policies you have and the way they are structured are going to need a review.

A change in income

If you have income protection, your premiums and pay out are based on your income, so a significant change means a discussion with your adviser is essential to make sure you aren’t disappointed should you need to claim.

A reduction in income may also mean you are struggling to pay the premiums and it can be tempting to cancel policies. Taking the time to discuss this with your adviser means you can work to find a solution so you can still have some cover in place.

Special events increase

Making changes to keep your cover up to date doesn’t need to be arduous. Most life insurance policies have a built-in ‘special events’ increase which means you can increase your existing cover, without further medical underwriting. The specifics vary between providers which is why it is important to discuss with your adviser, and discuss your future plans when you first get your cover in place.

Some providers also give you the opportunity to increase your cover on certain policy anniversaries or allow you to purchase a future insurability option, which allows further increases to cover each year without further assessment (up to certain limits).

Need to discuss whether your cover is still best meeting your needs? Call one of our advisers today.

When should you change your insurance

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What should you do when income protection premiums rise?

With the nature of insurance underwriting and risk trends, as you get older your insurance premiums will rise. This is as true for income protection as any other type of insurance, but has the added complication of the cover  automatically being cancelled when you reach age 65*.

So when you are in your early 60s and nearing retirement, your premiums are rising and your  pay-out period is increasingly limited, what do you do?

It can be tempting to cancel the cover and hope for the best, reduce your sum insured, or extend your wait period (the period before the cover starts to pay-out, usually 4, 8, 13 or 26 weeks), however this may not be your best option.

What are the issues?

If you are paying higher premiums but have extended your wait period or reduced your sum insured the value you get back in a claim continues to diminish.

If you are unable to work because of an accident you will be covered by ACC, regardless of your Income Protection sum insured or stand down period. This tends to mean that Income Protection can sometimes be redundant when ACC cover is helping, because most Income Protection policies are subject to offsets.

However, if you are unable to work because of an illness, this is where Income Cover helps – but you will only get a pay-out if you are off longer than your wait period – if that is four weeks and you are off work for five weeks you may only get one week paid out. So in a scenario where you are having to extend the wait period to keep premiums down, and are having to consider eight or 13 weeks before receiving benefits, alternative options can be considered.

In these scenarios, consider this: Given that ACC is there for accidents, your Income Cover becomes more about covering illnesses. If you have a long wait period such as 13 weeks, then the Income Cover only becomes effective in scenarios where an illness takes you out of action for more than three months. In most cases (although not all), these illnesses are likely to be conditions that are covered by trauma cover, such as cancer, heart attacks, strokes and so on.

How trauma cover can create a solution

For clients in this position we often recommend they consider trauma cover.

There are a number of reasons for this:

  • The entry rate of the premiums is lower
  • The pay-out is paid on the basis of a diagnosis, not on your ability to work
  • The benefit is paid as a lump sum so is paid out up front, without a wait period
  • You can use the pay-out however you see fit, it is not restricted in its use. It can be used to extinguish debt in one go, or support you as replacement income for an extended amount of time

So how could this work?

Let’s look at Andrew, a, 63-year-old lawyer. We’ve changed the name, but the figures are from a real client.

Andrew has income protection, with cover of $15,906 per month. He would get half paid out after an eight week wait, and the remaining half after a 13 week wait, but both only have a three month claim benefit. His premium is $223.67 per month.

This cover is mostly offset by any ACC payments available, so would only help by topping up ACC if Andrew can’t work because of an accident, only an illness.

The three month benefit period means he’ll only be paid for three months after his wait period (if he were off for that long) meaning his total potential benefit is just $47,718 – and he would need to be unable to work for a total of six months to receive that.

For a similar premium, $243.74 per month, he is eligible for $100,000 of accelerated trauma cover. This gives him more than twice the pay-out benefit, with no wait period and no requirement for time off work, as an up front, lump sum payment.

In addition to this, his income cover is going to expire at age 65, so the policy he currently has will cancel in two years. Trauma cover can be continued for life – so at this stage of his life and career with all the information available, Andrew may decide it is a much better use of his premiums.

The one downside we would make sure he was aware of is that the trauma cover has a list of specified conditions, whereas income protection is more of a catch all. However the list is extensive, and they tend to be the most common conditions.

What you need to know

You can have stand-alone trauma cover until age 70, however accelerated or linked-to-life cover you can have for life. Because you can have trauma cover for longer, you can get it on a level premium plan, so you know what it will be as a fixed expense which is great for budgeting in retirement.

Different types of insurance are better placed to meet your needs at different stages of life. Trauma cover is not superior to income protection and depending on where you are in your life or career, the best option is often to have both.

All types of insurance have upsides and downsides, and we want to empower our clients to make informed decisions.

It is always best to discuss your options with your adviser, they know the different types of insurance cover available, how to set them up to get the most out of them and what is going to suit you at different stages of your life and career.

 

*some providers offer “to age 70” options at an additional premium

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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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How to get your insurance claim paid

At a conference in February Nadine Tereora, the CEO of Fidelity Life, stated that their claims rating was 99.8%. All the insurance providers Plus4 work with have claims ratings of over 95%, which illustrates very clearly that insurance providers are paying out on the vast majority of claims that are made.

On the back of this evidence, and our own experience, as advisers we are often taken aback by the staunch belief of some people that insurance companies will do whatever they can to get out of paying out on claims.

If you are curious about that small percentage of claims that don’t get paid, read on, and find out what you can do to make sure you are in the 95% if you ever need to claim.

Disclose, disclose, disclose

Yes, all those forms are a pain to fill out, but doing it properly and taking it seriously is critical to getting that pay-out when claim time comes.

We believe the insurance providers we use pay out on all legitimate claims, but insurance providers need all the relevant information to be able to make the decision to underwrite a client’s insurance.

The main reason claims are not paid out is due to material non-disclosure.

Material non-disclosure means things that are relevant or pertinent to the claim. For example, if you have a skin cancer diagnosis but didn’t disclose your knee surgery that shouldn’t be an issue, however if you had previously had cancerous moles removed and didn’t disclose that, it is going to compromise your ability to make a successful claim.

When it comes to making a claim, it doesn’t matter whether the non-disclosure is accidental or deliberate, the claim could be denied.

If you feel tempted to hold something back because you are worried you won’t be covered, you should know that you could still get comprehensive cover, with some minor exclusions for pre-existing conditions. And for some conditions, after a symptom free period you can be covered. Working with an adviser and being honest with them about your concerns and history, means you will know where you stand, and be able to make informed choices about your cover.

Keep policies up to date

One of our Plus4 values is that we will recommend the best policy, but sometimes when we take on new clients and review their current insurance we find they have policies that are out of date, below current industry standards, or not from a provider we would use or recommend.

In these circumstances we would work to recommend a better policy to the client. We make sure the policies we recommend are at the top of industry standards for wordings, and make sure it still matches your current situation.

A potential concern with changing policies is the loss of any pre-existing conditions that were covered, however if we recommend a change there will be good reason to do so. When going through this process we are careful to not lose cover, by applying for the new policy before changing or cancelling the current policy. This provides continuation of cover, and also means that if the provider comes back with exclusions we can work with the client to weigh up their choices.

In addition to making sure our clients have the best cover, we want them to be informed and empowered when making decisions for their insurance.

Understand what you are covered for

Making sure your expectations are aligned with the ins and outs of your cover means you will know when you can make a legitimate claim.

One of the interesting contributors to the statistics on denied claims is a lack of understanding of what different types of insurance cover and claims being made that the policy doesn’t actually cover.

For example, if you have income protection and cannot work because of a health condition your income protection should cover you. However if your child has a severely broken leg and you cannot work because you need to care for them, unfortunately you cannot claim on your income protection.

Depending on your policy however, if you have trauma cover and your child becomes unwell with one of the listed conditions (such as cancer) you may be eligible for a lump sum pay out. When you are choosing your insurance policies, talking through different scenarios with your adviser to understand which policies come into play under which circumstances will help you make informed decisions.

If something happens and you want to find out if you can make a claim, get in touch with your adviser and they will help you understand which policy you should be claiming under will guide you through the claims process.

Work with an adviser

The absolute best way to get your insurance claim paid is to work with an adviser from the very beginning. Our job is to put you in the best claimable position at any given point.

  • Choosing a policy: We work with our clients to get the right policy for their needs and we know the ins and outs of every policy we sell. This may mean choosing a different policy for each spouse, depending on their personal and family medical history, lifestyle and industry.
  • Reputable providers: We are selective about the providers we work with, based on their financial strength rating, product rating and claims rating.
  • Disclosure: Our advisers are expected to go through the disclosure forms with you and be on hand to answer any queries that arise through the process. This is an important part of the applying for insurance, as we want our clients to be able to claim when they need to.
  • Claim process: Supporting our clients through the claims process is an important part of our role. Check out our blog post on how to make a claim to find out more.

A final note

If insurance companies regularly tried to get out of paying legitimate claims, stories like these would not be newsworthy. Insurance claim statistics are high, what drives them down is unsuccessful, non-legitimate claims.

However, New Zealanders are underinsured*, and we believe these sensationalised stories in the media, given without the full background information, are irresponsible because they discourage people from getting insurance.

Getting your insurance cover in place by working with an adviser, and maintaining an ongoing relationship with them, is a critical step in having good cover and making successful insurance claims. If you don’t have an adviser get in touch with one of ours today. If you have an adviser and would like to change to one of ours, you won’t to have to change your policies, though if we think you could have better cover, we will let you know.

*New Zealand has one of the lowest penetration rates of life insurance in the developed world (Massey University and Financial Services Council – Exploring under-insurance in New Zealand) and approximately 30 per cent of Kiwi households have life insurance cover. (NZIER – Resetting life insurance)

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Is the insurance industry bad news? Plus4 responds

It has been an interesting week for the insurance industry with the release of the Life Insurer Conduct and Culture report by the Financial Markets Authority New Zealand and the Reserve Bank of New Zealand.

The report feeds back to the market both positive and negative findings. We welcome this report and are glad that it brings greater transparency to the industry. While we recognise that the insurance sector isn’t perfect and there is progress yet to be made, we believe the media coverage of this report has been largely (and unfortunately typically) one-sided. The media coverage about the report paints an unbalanced picture of the industry we are passionate about and proud of.

At Plus4 we absolutely believe that poor conduct in the industry should be called out, and that there is a small minority of bad players that tarnish the good work of our advisors and the majority of our peers. New Zealand already has an under-insurance problem and uncertainty from consumers about why obtaining the correct insurance is important, and we have concerns about the damage that irresponsible media reporting on this report could do.

We would like to take this opportunity to answer some of the coverage of the report, reassure our clients that they are in safe hands with Plus4, and outline some ways in which all consumers can make good decisions when buying insurance.

The difference between advisers and providers

The report was tasked with looking at the conduct and culture of the insurance industry, in particular that of life insurance providers.

It is important to understand that while advisers work closely with a range of different providers and sell their products, we are not insurance providers. There is an important distinction between the two.

Insurance providers sell to consumers in three different ways:

  1. There are those that only sell directly to consumers (often through call centres or over the internet) without meeting with clients. This includes banks that sell insurance. The challenge for consumers buying insurance directly is that it is very hard to compare the wording in different policies to know if you are getting value for money and what exactly you are covered for. There is also little if any ongoing support and contact.
  2. Then, there are providers that do both – they sell directly to consumers, but also sell their products through advisers.
  3. Lastly, there are providers that sell only through advisers.

The report reviewed 16 life insurance providers in New Zealand, including some that sell directly to consumers, others that sell through advisers, and those that do both.

Insurance advisers, like Plus4, work with many different providers to find the best product for you and our other clients. At Plus4, we even use independent research to make sure the providers and products we work with are the best available. Providers (including banks) that sell directly to consumers are able to avoid this level of scrutiny.

Commissions and incentives

One of the points of concern raised in the report and amplified by the media was around commissions (paid to advisers when they sell a provider’s product), incentives and rewards. Insurance is a sales-based industry and as such has historically been incentivised.

In particular, the report was concerned about advisers being financially motivated to choose a product for a client based on the commission or incentive they could receive, not on the merits of the product, and whether these commissions were disclosed to clients.

It’s important to note that:

  • Commissions are paid for by the insurance provider, not you as the consumer. These commissions ensure we can continue to supply you with high-quality insurance advice without having to charge large fees to cover the extensive time involved. This helps keep quality insurance advice in NZ easily accessible and affordable for consumers to engage in.
  • Our advisers disclose any commissions in the disclosure documents we provide you. This isn’t required by law yet, but at Plus4 we believe that this level of transparency is important.
  • When we recommend a product to you, we write a report outlining why we have chosen that policy. We must justify why this is the best product for your unique circumstances, and that has to have a basis in the technical wording of a product. This process means our advisers will naturally recommend different products to different clients, depending on their specific needs.
  • All the insurance providers we work with provide very similar commissions and incentives – this means they are unlikely to influence our behaviour at all.
  • The commission we are paid by the insurance provider isn’t charged to you – if you were to buy the exact same product directly from the provider, or through our advisers, your premiums would be the same.
  • Commissions are paid up front, but this payment also helps pay for future service, such as regular reviews, claims assistance, administrational updates and so on for years into the future– at no cost to the consumer. This is our service commitment to you.

We believe all New Zealanders should be able to seek high quality advice on insurance – it is an important purchase and getting it wrong can cost you when you need it most.

We also believe that insurance advisers deserve to make a living, like anyone else. Individual advisers take on significant financial risk with the advice they give, and are on call for their clients – we promise to be there and be available for our clients when they need us.

Beyond best practice

The law around disclosure can be loose, however there are industry best-practice standards that most of the industry follows. At Plus4 we have committed to a standard that is much higher than that required by law.

Our partners are held to that standard and any adviser that breaches our standards would be asked to leave the group.

How can consumers feel safe when buying insurance?

It is only natural that when a report like this comes out, or the insurance industry get bad press, that people wonder how to protect themselves. Insurance can be a significant expense, and isn’t something anyone enjoys buying. Here are some ideas on making sure you get the most out of it.

  • Don’t buy direct: We strongly recommend buying insurance though an adviser, not directly from the provider. Non-aligned advisers (advisers who are not connected to an insurance provider) should be comparing a range of policies across providers to find the one that best suits your needs. If a provider doesn’t sell through an adviser, you should ask yourself why.
  • Cheaper isn’t better: If you are saving money buying directly because it is cheaper, it may cost you significantly down the line, through non-standard clauses, poor wording, poor payment history or a lack of ongoing support.
  • What you need to know about advisers: Not all advisers are equal so do some basic research first. Key things to look out for include:
    • Do they belong to a group? If your adviser belongs to a group it is likely there are standards above those required by law that they must adhere to, and there is a higher level of oversight that they are meeting those standards.
    • What is the process they use to choose policies? They should follow a robust process (which they can explain to you clearly), and be able to substantiate and justify why they recommend a certain provider or cover.
    • Do they encourage regular reviews? Regularly reviewing your policies is a critical part of saving you money, making sure your chosen policies continue to meet your needs as your life changes, and making sure you have claimed on any claimable events.

If your adviser follows these steps you can rest assured, you have a good adviser.

If you want to talk to any of our Plus4 team, want to make sure your insurance is up to date, or have concerns about your current insurance, please call us.

FMA RBNZ LIfe Insurer Report

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Do children need health insurance?

With GP visits free to children under 14 years old, getting medical cover for your healthy, active children may seem unnecessary.

We think it is worth considering, and there are a number of reasons why.

In our previous blog on health insurance (you can read it here) we described health insurance as doing something your future self will thank you for. The same concept stands for insuring your children – you are setting them up for later in life, in a time when our public health system may look very different to what it does today.

Protection against pre-existing conditions

One of the problems adults find when they go to get health insurance is the limits placed on them by pre-existing conditions. A pre-existing condition is a health problem that exists before you apply for a policy – insurance companies are businesses and as such they are concerned about their bottom line. This means if you have a pre-existing condition they are likely to exclude cover for that condition, charge a higher premium or impose a waiting period before that condition is covered.

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

Pre-existing vs Congenital: An important distinction to be aware of

It is important to understand the distinction between pre-existing conditions and congenital conditions as most insurance policies do not 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) can be covered.

Access to healthcare, no matter how public funding changes

With New Zealand’s aging demographics the way we are able to access public healthcare may well change in the future. The government currently spends 20% of its budget on healthcare and we have 10 workers (i.e. paying tax to fund the government budget) for every old age dependent, however in the next 20 years that number is going to shift to four workers for every old age dependent. That future healthcare burden raises some questions around the sustainability of our public system.

While we don’t know exactly what the future looks like, it is likely that private medical insurance will play more of a role in getting the healthcare you need when you need it.

Want to talk to someone about insurance for your family?

If you need some help weighing up the pros and cons of having medical insurance for your children, get in touch with one of our advisers today. They can talk you through some of the ins and outs of the policies available and help you find one that best suits your family’s needs.

Do children need health insurance

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Do you need health insurance?

“Do something today that your future self will thank you for.”

Whether or not you are a fan of bite-sized wisdom, this is a great point from which to discuss health insurance.

In New Zealand we are lucky to have a fairly robust public health system which can lead people to think health insurance is a luxury item they can do without.

To a certain extent that may be true but it isn’t the whole story. There are a myriad of benefits to not relying solely on the state to look after you should health problems arise.

Get it before you need it

There are two main reasons you should get health insurance before you think you need it. Firstly the upcoming shift in New Zealand’s demographics, and secondly establishing a relationship with a health insurance provider while you are in good shape.

changing demographics

The government currently spends 20% of its budget on healthcare and we have 10 workers (i.e. paying tax to fund the government budget) for every old age dependent, however in the next 20 years that number is going to shift to four workers for every old age dependent. That is quite a healthcare burden and raises some questions around the sustainability of our public system.

We don’t know how this will be managed, but the government will need to make some changes to fund this and we may not have the level of public coverage we are used to. We may find health insurance is no longer a luxury but a necessity and those with health insurance already in place, with fewer exclusions, will be well placed.

Pre-existing conditions

The second point is that while the fitter and healthier you are, the less likely you are to think about health coverage – however this is exactly when you should be establishing your relationship with a health insurance provider – before you need it. You will then find yourself to be well covered when the need does arise.

Control over your treatment

Another benefit to having health insurance is getting the treatment you want, when you want it. Whether you are treated in the public or private system you may see the very same surgeon – the difference is how quickly you will see them. Through the public system you can end up waiting months for a non-urgent procedure (defined as anything that can wait longer than a week) which you may get as soon as the following week if you are covered by insurance.

What about setting up a savings account for unexpected medical bills instead?

A popular idea, but many people don’t realise how expensive surgery is. And with medical inflation is rising at a rate of 10% annually, it is going up quickly. The current cost of a hip replacement is $22,000; a heart bypass is $45,000. Even a hernia repair will set you back at least $6,000. This doesn’t mean you shouldn’t have an emergency savings account though – this can really help reduce your premiums by having a higher excess on your plan.

can I cancel it if it doesn’t fit the budget?

Many people have seasons when the budget gets a bit tighter, and health insurance can end up being up for discussion. The two biggest downsides to cancelling your policy are finding yourself uncovered when you really need it, and when you do renew your policy finding you are no longer as well covered if any health issues have arisen in the interim. Health insurance should really be a part of your long term plan, and your adviser is well placed to help you make it work.

One last note on pre-existing conditions – don’t make the assumption that you won’t be covered without talking to an adviser – some exclusions expire after a period symptom free and you will still be covered for more than you won’t be – some coverage is better than none.

If you want to discuss more about your health insurance options call one of our friendly advisers for an expert opinion.

do you need health insurance

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Why you need trauma cover

Trauma protection is an important part of your insurance coverage, but we often find it is poorly understood by clients.

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.

The infographic below shows the most common claims on trauma covers.

Infographic-trauma-cover-01

How do you know if trauma protection is right for you?

If you have medical cover and income protection, having trauma protection can feel like doubling up, but there are a few reasons it can be worth having trauma cover as well, or why it may actually be your best option.

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.

While income protection is important to have, it only covers the insured person if they are unable to work. Some of the challenges life can throw at our families mean that we want or need to have time off work to be there to help our loved ones.

Many trauma policies also cover children – this means that if a child suffers one of the included injuries or illnesses the parents can take time from work to be with the family and focus on recovery without worrying about bills.

Someone who isn’t in paid work, such as a family caregiver, can get trauma cover – meaning should something happen to them, their spouse can take time off work to be with them and focus on recovery and not have to worry about bills.

Some people, such as those in dangerous work, can struggle to get income protection which means trauma cover is the best option. Likewise, if income protection is out of your budget trauma is the next best.

How much is trauma cover, and how much should I get?

Determining how much trauma cover to get, or which provider’s policy is best for you, can be challenging, which is why it is always best to talk to an adviser, who can take into account your individual circumstances, your budget, other cover you have in place and your lifestyle.

Unless you include a “buy back” in your premium, once you have used your trauma cover it is gone. The buy back rate is usually very small (as low as $4 a month) but on some policies it can allow you to claim up to five times, provided there is at least six months between claims and the claim is for a separate event. While it may sound unlikely to claim more than once, it is not uncommon for people to claim three times on one policy.

If you think trauma cover is something you need to consider as part of your personal cover plan, get in touch with one of our advisers today.

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Who owns your policy?

Getting life insurance in place involves a lot of decision making, and choices around the ownership structure of your insurance policies are as important as any other. Keeping the ownership up to date as your life changes is equally vital.

A good insurance adviser will explain that the structure of the cover is just as important as the cover itself – this is because wherever the ownership is placed is where any pay-out will go.

These are some of the issues around the ownership of both personal and business insurance covers that you need to be aware of.

Ownership of personal insurance policies

All polices can be jointly owned, and it is a good idea to make sure they are – for example, an income protection policy can be claimed by a spouse if the policy holder is incapacitated.

It is particularly important for life insurance policies. If you are in a relationship it makes sense that your spouse will be an owner on the policy – this means the policy will be paid out quickly and easily when it is needed.

If you are the sole owner of your life insurance policy this means the pay-out will go to your estate. If you don’t have a valid will it can take some time to be released. As insurance policies are considered relationship property under the Relationship Property Act, it could also be held in probate for up to six months.

The most common issues around policy ownership come into play when there is a relationship break up.

Firstly, if a former spouse or partner is an owner on the policy and the premium is still being paid, they will receive the pay-out. Secondly, if the policy is paid into the estate and it is held in probate, a former spouse or partner can make a claim on it as relationship property.

We had a client who found out his ex-wife was still paying the premiums on a policy on his life they were both the owners of. She was legally able to do this, and to receive the pay-out when he passed as it would go to the remaining policy owner.

The key is to keep your policies up to date and touch base with your adviser when you have any life changes, as they will know what needs to be done to make sure what you have in place still meets your needs.

Another issue to be aware of is insurance policies purchased through a bank. When you take out insurance with a bank, sometimes they own the policy, which means all the anniversary correspondence goes to them – which can make it hard for you to keep track of ownership, and if the policy is still relevant to your needs.

We recently carried out a review with a client who believed he had an income protection policy with a bank, but on closer inspection it was actually a debt protection policy. He was paying for a certain sum to be insured, however the wording of the policy was that “In the event of a claim we will pay you the lesser of the policy or the debt you owe us”. When we spoke with him he hadn’t owed this bank any money for six years – this policy was out of date and totally irrelevant to him, but he had been paying the premium the whole, time and would have received nothing.

Ownership of business insurance policies

There are some key issues around the ownership of business policies as well.

Where there are multiple shareholders in a business, those parties will often take out life policies for each other to the value of the shares. On the event of a shareholder’s death, their shares will pass to their estate, and the life insurance pay-out to the business will allow the remaining business owner to buy the shares back.

In theory, this works very well. In practice there are a few issues to be aware of, and systems you can put in place to prevent them.

While the shares pass to the estate, the directorship does not. This means there may be one director left, who is now solely in control of the company, and of course all its assets. And while the life insurance pay-out was intended for the company to buy back the deceased’s shares, if the premium has been paid by the company the sole remaining director is in control of that asset, and can quite literally ‘take the money and run.’ This can be true even if there is a shareholders agreement in place, because not all agreements deal with what is meant to happen to an insurance pay-out.

To mitigate this risk, the company needs to set up a ‘Buy/Sell Agreement’ and should set up an independent trustee to own the insurance on behalf of the business.

Keeping up to date

Families can fall out, and so can business partners. Who owns a policy and how it is structured are just as important as the cover itself.

Our Plus4 advisers have seen almost every scenario play out, so they have potential issues front of mind when they are helping you set up your policies. Having your insurance structured appropriately from the get-go is the easiest way to avoid issues.

It is also important that you see your adviser as part of your support network and get in touch whenever life changes. Doing so means you won’t end up paying for policies that you don’t need, or that won’t do what you want them to when you need them.

If you want to review your policies to make sure they are meeting your needs, get in touch with one of our knowledgeable and compassionate advisers.

Who owns your policy

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What is ACC Cover Plus? And ACC Cover Plus Extra?

In New Zealand we are lucky to have ACC, which provides us all with no-fault comprehensive injury cover no matter where you are when you are injured.

ACC covers most physical injuries if they are caused by an accident, a condition that comes on gradually because of your work, medical treatment or sexual assault or abuse. ACC provides a definition of a physical injury on their website here.

However, once you move into the self-employed space things can get a little trickier and that is where ACC Cover Plus and ACC Cover Plus Extra come in to play.

ACC Cover Plus

ACC Cover Plus is basically the self-employed version of ACC cover. The rate of cover provided, what is covered and the services available are all the same as ACC. What changes is how you pay your levy and how your cover for lost earnings is decided.

When you are an employee your ACC levy is automatically deducted from your income, however when you are self-employed you are invoiced each year by ACC according to your previous years income and your industry. This means your ACC invoice can vary from year to year depending on your income or if you change industries.

When you are an employee and you lose your income due to an injury there is a very clear line as to what that lost income would be – your wages or salary. Self-employed incomes can fluctuate dramatically from month to month or year to year and this can cause some challenges and uncertainty when trying to get covered by ACC.

New Zealanders are lucky to have access to ACC, and with ACC Cover Plus even as a self-employed person you are covered. However there are two areas that ACC Cover Plus can be challenging. The first is with the levy based on the previous financial year’s income there is uncertainty each year as to what it will be. Secondly the uncertainty around cover with a fluctuating income can leave self-employed people more vulnerable.

This is where ACC Cover Plus Extra comes in.

ACC Cover Plus Extra

With ACC Cover Plus Extra you agree with ACC on a level of cover for lost earnings, to suit your personal circumstances. This means if you make a claim there is no need to prove your earnings, as the weekly compensation has already been agreed. It also means you know what your ACC levy will be each year which makes financial planning smoother.

Moving on to ACC Cover Plus Extra puts you back in control of your premiums, puts you in control of what you get paid at claim time and gives you peace of mind regarding what you will get paid.

Is there a better way of managing risk for the self-employed?

ACC is an expensive type of cover when compared with private insurance. There are some gaps with regards to illness and degeneration, and moving onto ACC Cover Plus Extra is the first step to make things easier.

We then tailor your ACC cover so it is right for you. This may be by reducing the cover and taking on income protection and mortgage protection to top it up, or we could recommend you increase it.

There are three main benefits to taking this approach.

  1. ACC only covers accidents – taking this approach means you will also be covered in case of illness, and if ACC declines to cover your injury on the basis of degeneration.
  2. More cover for less – you can save money on premiums.
  3. Peace of mind – you know how much cover you have, and you know that you are covered regardless of the circumstances of your lost income.

We have had clients who have income protection in place, but are also paying the default ACC Cover Plus Levy – essentially doubling up and paying twice. You can only claim on one of these so you shouldn’t be paying for both of them.

It is important to remember that reducing ACC Cover Plus Extra also reduces the entitlement for accidental death cover. This is where talking to one of our advisers is important so they can advise you of all the implications and how to best cover yourself.

Try our five question ACC survey here and receive your FREE risk management report.

If you are ready to review your ACC levy and make sure you have the most comprehensive cover in place, get in touch with one of our team.

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How special events increases protect your future insurability

We all know the only constant is change. However, come claim time you need to be reassured that your cover will be sufficient for your current circumstances. It isn’t practical to set up your original cover for future events – such as getting enough cover for three children when you only have two, or two mortgages when you only have one.

This is where the special events increase comes into play.

Most life insurance policies have a built-in ‘special events’ increase which means you can increase your existing cover, without further medical underwriting.

The specifics can change between providers, but they generally include;

  • Marriage or civil union
  • Divorce or legal separation
  • Becoming full-time carer for a dependent relative
  • Birth or adoption of a child
  • Taking out or increasing a mortgage
  • Purchasing a residential property or residential investment property, vacation home or bare residential land
  • A dependent child starting full-time tertiary study
  • An increase in annual salary
  • The death or terminal illness of a spouse, defacto partner or civil union partner

The timeframe in which you need to apply for the increase varies between insurers, and the increase available is different for each event. It is important to speak with your adviser about your plans for the future as well as your life stage right now, and touch base with them anytime your situation changes.

Some providers also give you the opportunity to increase your cover on certain policy anniversaries or allow you to purchase a future insurability option, which allows further increases to cover each year without further assessment (up to certain limits).

How this can help if your circumstances change

The key element of these increases is that they are available without further medical underwriting. This means that should your health change you are still eligible for an increase to your cover (provided you have not been diagnosed as terminal, which is defined as 12 months).

We recently had a client who got life and trauma cover with us. There is a standard three month stand down for cancer on new policies, and unfortunately, she was diagnosed with an aggressive form of cancer within five weeks. We worked with her to get the pay-out covered but were unsuccessful. At that time, she hadn’t been diagnosed as being terminal, but with the aggressive cancer she had it was likely.

We advised her to take out a $100,000 loan, and increase her life cover by $100,000 as a special events increase on the loan. This gave them money to live on, and when she tragically lost her cancer battle her husband was able to repay the loan with the extra cover on her policy.

The advantage of working with an adviser

If you had your insurance from a bank you would get a yes or no answer – the bank wouldn’t tell you any workarounds. The huge benefit of working with an adviser is that they are working for you and know the policies inside and out and know how they can help you make the policy work for you.

Just because your health has changed doesn’t mean it is all over in terms of increasing your life or trauma insurance. There may still be ways that your adviser can help you get the most out of your policies, and is always best to bring them into the loop as soon as possible so they can work with you effectively.

Want to discuss your future insurability or talk about a special events increase? Contact one of our friendly and knowledgeable advisers.

how special events increase protect future insurability

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Trauma Cover – the best safety net

When we meet with clients we work to help them understand scenarios where they would use the different insurance covers. When everything is going well it can be hard to imagine life any other way. We spoke to a Plus4 client about her experience with trauma insurance to give a real life example of the difference it can make.

In November 2015 Jess and her husband Brian decided to get in touch with Mike Tonks at Plus4 to review their personal insurance. “Brian had met Mike through setting up insurance for the business,” explains Jess. “He was impressed with how thorough Mike was, so thought he might be able to help us with our personal insurance as well.”

Jess and Brian found Mike good to work with and transferred their personal insurance to Plus4. “I really felt like he wasn’t trying to sell to us but was looking at our situation and thinking about which types of insurance would help us. He offered different options, and described what each was there for, and gave examples of how different events could play out for us, which gave us a really clear picture,” says Jess.

As part of the review Jess and Brian got $150,000 of trauma cover, which included a three month stand down after getting the cover in place.

In July 2016, four months after the stand down ended, Jess, aged 43 years old, was diagnosed with breast cancer. The cancer was aggressive but was treatable with chemotherapy, which meant a gruelling year and a half of treatment lay ahead.

Jess sat down with a friend and went through everything she would need, including finding out what insurance she had and how it could be used.

Living in Queenstown, if Jess used the public system for her treatment she would have to travel back and forth from the hospital in Dunedin for treatment, which was a seven hour round trip. Having health insurance meant she could choose where to have her treatment, and so she chose to attend a clinic in Christchurch.

The trip by plane was much shorter, which meant she could fly to Christchurch, have treatment and fly home again in time to be with the children, aged seven and nine, after school.

So what did Jess and Brian use the trauma cover for?

  • Flights – giving her the freedom to choose where to have treatment, and minimise disruption to the children’s lives
  • Hotels – the aftermath of treatment sessions is unpleasant and unpredictable, and while there was family to stay with in Christchurch when she did have to stay overnight, the privacy of staying in a hotel made Jess more comfortable
  • Food – being able to afford quality pre-prepared food for the family took a huge burden off Jess and Brian in a hard time
  • A cleaner and gardener – Jess was unable to use her arm for a while
  • A getaway for the family
  • Keeping the family financially afloat as Jess took a year off work

“While it was great to know we had the money coming, we weren’t initially sure how we would use it,” Jess remembers. “Some of these things were real luxuries, and some of them just allowed us to hunker down and work on me getting well.”

And while it was a significant sum, Jess says they were happy they had as much cover as they did as the expenses added up quickly. “Mike explained it was the best safety net you could have, and I am so glad we listened to the experts, because the premium was very little considering the huge impact it made when we needed to claim,” she explains.

For Jess and Brian, having trauma cover took pressure off the family at a time when things were extremely unsettled, and they were facing a large unknown.

If you want to review your cover or talk to an adviser about trauma cover, get in touch.

trauma cover edit

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Have you thought about the future when insuring your business?

When you set up your business insurance, the focus can be on the here and now – how many employees you have and their level of skill, the business income, level of debt and so on. However, thinking about the business’ future insurability is also worth considering.

This allows you to look forward and consider your needs in the coming years as the business grows and changes. By reserving the additional cover now, you won’t have to apply for a new policy, or repeat the pre-approval process down the track.

How does the Business Future Insurability Option (BFIO) work?

A client bought a farm and needed to get business insurance. It was agreed that $2 million would be enough for their current needs, however they knew the farm next door would be coming up for sale in the next ten years and they wanted to be able to buy it, and be able to insure it even if circumstances had changed in that time.

In anticipation of this future plan, they took out $2 million of cover right away, but also set their future insurance for $3 million. When they bought the second farm, increasing the insurance premium was straightforward.

While exact details can vary between providers, the key limits to using the increase usually relate to the increase in value of a key person to the business over three years, an increase in financial interest in the business averaged over three years, and an increase in the loan guarantee.

You need to be taking out the original sum at the time to be able to set up the future insurability option, and the maximum amount insurable is five times the original sum assured, up to $5 million.

So how much does the future insurability benefit cost?

The extra premium is relatively low, but varies depending on your original sum insured and how much you have reserved for the future. The premiums will also increase as the cover does. This is where your adviser can help with tailored advice for your current and future circumstances.

What about future insurability for personal insurance?

Most life insurance policies have a built-in ‘special events’ increase which means you can increase your existing cover, without further underwriting, in circumstances such as having a child (by birth or legal adoption), marriage or civil union, divorce or the dissolution of a civil union. The specifics can change between providers but they may also include financially supporting a dependent child through a first course of full-time tertiary education, taking out or increasing a home loan, becoming responsible for the full-time care of a close relative, or the death of a spouse or de facto partner.

The increase available is different for each event, and what is offered can vary between providers, so it is always good to talk with your adviser about your plans for the future as well as your life stage right now.

Want to discuss your future insurability or talk about a special events increase? Contact one of our friendly and knowledgeable advisers.

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Getting the most from your income protection

Income protection insurance is one of the most important insurance covers you can have. As we have said before, your ability to earn an income is your greatest asset.

Many income protection policies also come with add-ons. These vary between providers – some are included in the policy, whereas others carry an additional premium. To make sure you are getting the most from your income protection policy, it is worth knowing what add-ons are available.

Dependent Caregiver/Relative Benefit

When you take out income protection, you are insuring your ability to earn an income. While it is obvious that this is dependant on your health and wellbeing, none of us exist in isolation. Having a relative suddenly needing care can impact your ability to work.

This is where the Dependent Caregiver Option comes in. As an example, the Partners Life policy will pay out six months of your cover if you need to care for a parent, child, sibling, grandparent, grandchild, mother-in-law, father-in-law, spouse, de facto partner or civil union partner.

There are restrictions and differences between providers, which is why it is always best to speak with your adviser to find the policy that best suits your needs.

Retirement Protection

Income protection covers you until you are 65 years old, which is great for an income throughout your working life. However, if you start to claim relatively early in your working life, what happens after you reach the age of 65?

If you choose the Retirement Protection Option add-on, you can choose to have 2 percent, 4 percent or 6 percent of your pay-out contributed directly to your Kiwisaver fund. It could mean your retirement savings do not languish when you are unable to work.

Inflation Protection

If your income protection claim covers a long period of time, you will need to protect your pay-out from inflation. While $5,000 a month may be fine right now, it may not be sufficient in 20 years.

Including inflation protection in your policy means the pay-out will rise in line with the CPI adjustment for inflation.

Payment Term Restriction Option

Some providers will include a restriction on mental health or certain physical conditions. For example, Partners Life has a Mental Health Restriction and Fidelity Life offers a Spine or Mental Disorder Restriction.

These are common conditions that are claimed on income protection, so if you opt in to a restriction you can save on your premium. If you were a Fidelity Life client and you opted in to the restriction, you would only get two years paid out on a spine or mental health claim – but you would save 20 percent on your premium.

Booster Option

If you include the booster option when setting up your cover, you can boost the benefit by 30 percent for the first three months of the pay-out. Most claims are completed in 3 to 6 months, so this is a great option to get more from your pay-out when you do claim.

Specific Injury Benefit

Many income protection policies have a list of specific injuries and illnesses that they will pay a certain amount of your policy before the waiting period is up. These can include (but are not limited to) fractures, loss of a digit or limb, organ failure or burns.

Again, it is important that you know what your policy covers so you can get the most from it should something happen.

How long should you keep your income protection policy?

Income protection is one of the most expensive covers, which means when expenses are cut back it can be the first to go. Recent research by Asteron showed that the average age of income protection claims was 47 years old, and the average age of cancellation was 46 years old.

Working with your adviser, who knows the providers and policies in great detail, means you can work out how to reduce your premiums while maintaining some cover. You will find there are different things you want from your policy in your 30s compared to your 50s.

There are also benefits built in to income protection cover (more than we are able to list here) that may mean you can reduce your other insurances instead, while maintaining income protection cover.

If you want to know more about income protection and the benefits and add-ons available, contact one of our advisers.

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How well does your medical insurance cover cancer?

Cancer is a scary diagnosis and it is important to have an accurate understanding of the role health insurance can play in access to different treatments.

The cost of cancer treatment can be high, and not all the medications that are available are currently funded by Pharmac, New Zealand’s Pharmaceutical Management Agency. That means people can be left to pay privately for the medicines that may give them their best chance.

You may have seen, or even contributed to, private campaigns to raise money to help fund cancer treatments not covered by Pharmac. Some of these medicines can buy people a little more time, however others may make the difference in actually beating the cancer.

While we do have good access to cancer screening and treatment in New Zealand, and generally expect treatment to be covered by the public system, the media coverage these fundraising campaigns have received has made us more aware that this may not always be the case. Pharmac, is a government agency that decides which pharmaceuticals to publicly fund. The reality is that they are not going to be able to cover everything for everyone.

When reading these stories and contributing to private campaigns, those among us with medical cover probably feel quietly relieved that, should we find ourselves in this situation, we will not have to rely on donations from strangers to afford the medicine we need.

Unfortunately, it isn’t actually that simple.

Some medical insurance providers do cover cancer treatments that aren’t funded, however many don’t. Whether your insurer will or won’t provide this kind of cover will be in the fine print of your policy. If you are buying your insurance through an adviser, they will know which do and which don’t – here at Plus4 Group we only sell those that do.

Most policies have an upper policy limit of $200,000 per claim per year and will be covered if the treatment is recommended by a specialist.

There are a number of health Insurance policies that have low limits for non Pharmac medications and limits for chemotherapy and radiography. Your Plus4 adviser will be able to identify for you the policies that are available and what will best fit your circumstances.

There may be times that a policy with different limits will work best for you, such as your employer offering cover as part of your salary package. With Plus4 it is all about finding you the right covers.

It isn’t just medical cover that can help out with a cancer diagnosis; trauma cover can pay out a lump sum which can make a big difference with medical expenses and lost income.

As insurance advisers it is our job to know the ins and outs of every policy so we can help you get the very best cover, with no disappointing surprises at claim time. If you want to discuss your medical cover, or any other cover, get in touch with one of our advisers.

Does your health insurance cover cancer

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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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How to make an insurance claim

Once insurance cover is in place it is something we rarely think about – until it is time to make a claim. The circumstances around making a claim are likely to be stressful, to make the process as smooth as possible, we have put together our best practice tips.

Contact your adviser

The first step is to call your insurance adviser, and this is a time when the decision to purchase your insurance policy through an adviser will really come into its own.

The relationship you have with your adviser means that they know you, your circumstances, and your policy details. This means you don’t need to find and decipher your policy at a worrying time. Your insurance adviser will immediately have a good idea if your event is claimable and can give you a quick answer before starting the claims process.

While the call centre staff at insurance providers are great people, and good at what they do, they don’t have the relationship with you that your adviser does. Your adviser also works with the insurance provider every day. This means they have a good relationship with them and understand the way they, and the claim process, work. That alone will make the process smoother, and therefore less stressful.

Filling out the claims forms

After you speak with your adviser they will send you the claims form and provide you with any support you need to have them accurately filled out. There will be a section for your personal details, and a section for any relevant professionals (such as a medical specialist).

They will also alert the insurance company that a claim is coming.

You need to get the completed form back to your insurance adviser as quickly as you can. They will check to make sure it is complete, and then deliver it to the insurance provider. The length of time the assessment takes depends on how much information is needed and how quickly the completed claim form gets back to the insurance company. In the case of a death event the insurer aims to have it approved within seven days. Once a claim has been approved, payment will be made overnight.

Medical insurance claims

In the case of medical insurance, there are two ways of going about making a claim; pre-approval or post-approval.

If you are having a health scare and have scans or other diagnostics booked in, you can get the claim process started with your insurance provider and apply for a pre-approval claim before the appointment. This means that everything is ready to go when you get your results back. If everything is okay you don’t need to make the claim, if not, the claim is already under way and is one less thing for you to think about.

If you are unable to process a pre-approval claim, you can make a post-approval claim, and this process is the same as claiming on other types of cover.

Claim approval

Once the claim is with the insurance provider they will get in touch with you directly, however your insurance adviser will be kept updated on how your claim is progressing and will be available to support you with any concerns you have. If need be, they will also advocate for you.

It is very rare for a claim to be declined. Legislation is in place to make it very difficult for insurance providers to “get out of” paying on an insurance claim.

Claims that are denied are usually the result of a non-disclosure by the client – even if the non-disclosure was accidental. This is one of the advantages of purchasing your insurance policy through an adviser – our process is so thorough that it is unlikely you would forget to disclose anything. Answering all those questions may seem tedious at the time, but it means come claim time there shouldn’t be any problems.

Our clients also have access to the Plus4 Claims Advocacy Team, and if we believe a claim has been unjustly denied, this team will get together and take a closer look.

When to make a claim

It is always best to make a claim as soon as possible. Depending on the policy and provider there can be a varying window of opportunity to make a claim, and some of our clients have successfully made retrospective claims. Read more about it in our blog post Is it too late to claim?

At Plus4 we work for you and we value our relationship with you. If you have any questions about a potential claim, do not hesitate to get in touch with your adviser.

How to make an insurance claim

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What is Total and Permanent Disability cover and how does it work?

Total and Permanent Disability (TPD) Cover is an easy one to explain, because it offers you just that – insurance cover should you become totally and permanently disabled.

There is some nuance to how it works, so let’s take a closer look.

What is TDP cover?

TPD is its own standalone cover, however it is also often included as a part of your trauma policy. Like trauma cover, it is a one-off, lump sum pay-out, and is not an ongoing payment like income protection.

To qualify for a TPD pay-out, you must be totally and permanently disabled. While the wording varies between providers (check out more on how we use this wording to find the best policy for you here), most commonly it is that you are so disabled that you are unlikely to ever be able to perform your occupation again, or any other for which you are suitably trained.

There are two types of TPD; covering either your ability to work in your own occupation, or in any occupation. TPD may not necessarily involve a significant accident or illness. For example, just the loss of the use of a hand would render a surgeon or chef unable to work in their profession again.

How much TPD cover do I need?

When deciding how much TDP cover you need, we calculate it along similar lines to life insurance. While income protection is seen as a temporary prop-up to get you through a rough time, with TPD cover you want to be able to extinguish all your debt. You may choose to pay off the mortgage, use it towards medical care, improve the accessibility of your home or workplace, or towards keeping your business afloat.

It is always good to have your adviser take you through the process of setting the level of cover, and conduct regular reviews of your policies to make sure you always have the right level for your life stage.

Do I have to be employed to get TPD cover?

As with trauma cover, you don’t need to be employed to get TPD cover. While the definitions and wording around what constitutes Total and Permanent Disability will change if you are not in employment, a pay-out will depend on whether you can perform home duties and activities of daily living.

How does TDP cover relate to trauma cover?

The key difference is in what the claim assesses.

When making a trauma claim, the claim is based on the cause of the trauma, or the diagnosed event. For example, a stage 3 cancer diagnosis will result in a trauma pay-out, regardless of the anticipated outcome of that diagnosis.

A TPD claim however looks at the anticipated outcome of the event, regardless of what caused it. For this reason, it is a good idea to have both (and they are often bundled together as a policy), as the TPD cover will catch what the trauma cover does not.

It is always important to talk to your adviser to make sure you have the right policies to meet your needs, and that you understand what each of them covers so you have the right expectations at claim time.

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What is an enduring power of attorney – and why do you need it?

Getting life insurance, trauma cover, total and permanent disability cover, and creating a will are great first steps in your estate planning. The next, and more often overlooked step, is to create an enduring power of attorney (EPA).

In New Zealand, you can also set up an ordinary power of attorney. An enduring and an ordinary power of attorney have different parameters and purposes.

The person who grants the power of attorney is the donor, and the recipient is referred to as the attorney.

Ordinary power of attorney

This is a temporary set up, for a specific purpose and time period, and gives someone the power to act on your behalf in your absence. For example, managing a bank account while you are out of the country.

It is either set up for a fixed term or can be cancelled. The attorney cannot have more power than the donor. As a result, if the donor loses their capacity to make decisions, it is cancelled.

Which brings us to an EPA.

Enduring power of attorney

You can assign someone EPA, but it only comes into effect if you become unable to make decisions for yourself, or unable to communicate those decisions. Some examples would include dementia, a stroke or a head injury.

You need to put some serious thought into setting up an EPA. It makes sense to do it when setting up your will, as it involves making equally important decisions.

There are two types of EPA; for personal care and welfare, and for property.

Enduring power of attorney for personal care and welfare

This comes into effect only when the donor loses mental capacity.

The person who has been given an EPA for personal care and welfare works with medical staff and care providers to make decisions about your health, accommodation, and other care decisions.

You can only appoint one attorney for this EPA, and it only comes into effect if a medical professional or the Family Court decides you have become ‘mentally incapable’.

Enduring power of attorney for property

This EPA covers your money and assets, and you can have more than one attorney for this, or even a trustee corporation.

When setting up this EPA you can specify whether the power comes into effect immediately, or only when you lose mental capacity.

How to choose your enduring power of attorney

You need to choose someone you can trust to make good decisions regarding your care. You can choose the same person to be both your personal care and welfare attorney and your property attorney, or you may find you prefer someone different for each. It may depend on your relationship with them and their skill set. If you choose different people, it is wise to consider if they will work well together, as it is a requirement that they communicate with each other.

For an example, consider if you had a stroke and were unable to communicate and you had selected different EPA’s for each role. Your personal care and welfare attorney would work with the medical staff making decisions about your care, but your property attorney would be working with your insurance provider on your trauma cover pay-out to cover the costs of that care.

It is important that your attorneys are people you trust, and that have a good understanding of your values and what your wishes would be in such a situation. You can also stipulate certain people that your attorneys must consult with on EPA decisions.

Why set up an EPA?

Setting up an EPA may sound a bit complicated, but it is a very important step. As with many personal insurance decisions, having an EPA in place is about looking forward, and looking out for the people you care about. If there isn’t an EPA in place, your family may have to go through the cost and stress of getting a court order to make decisions about you and your property.

For more information about estate planning, check out our article about writing a will and life insurance.

To review your insurance policies to make sure you have the best cover in place, contact one of our advisers.

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Protecting your most valuable asset

Ask people what their most valuable asset is and they will likely tell you it is their home. And should you probe further you will find they probably have their home well insured. Great! Chances are they will have life insurance too. And they definitely have car insurance!

The problem is that your house is not your most valuable asset.

So what is?

You are. Or, more accurately, your ability to earn is. What you will earn in the course of your working life will far exceed the value of your home. It is your income that pays the mortgage that keeps you in the home you love. And it also keeps you living in the manner to which you have become accustomed.

We notice and remember big dramatic events such as house fires or death of spouse and dutifully do our best to protect ourselves and those we love in such circumstances. However long term illness or disability can be less visible and, even when we know someone going through this, we may not think of the long term financial consequences.

This infographic starkly shows why it is time for New Zealanders to shift their understanding of risk management and insurance.

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So what sort of events can impact your ability to earn an income? It could be something small – for someone in a highly skilled job using their hands, such as a surgeon or dentist, a simple kitchen knife accident could be enough to stop them doing the job they are trained for.

Or it could be something big, like a heart attack or cancer. For people under the age of 65 these are the most common illnesses that impact their ability to earn an income. Surprisingly the average age for cancer diagnoses in New Zealand is 41, with one in three of us having some form of cancer before we are 65.

The treatment for cancer, and the after effects, can keep you from the workforce for long enough that the lack of income will become a worry. Long enough to lose your home in fact. Which is the last thing you need in an already stressful situation.

While you might be able to get three month mortgage repayment holiday from your bank, treatment and recovery can take a lot longer. And you need to take into consideration any other debt you may be paying off as well as your day to day utilities and living expenses.

If you’re thinking that this is pretty sobering stuff, the good news is that it’s really easy to protect yourself. Talk to one of our advisers today about your insurance policies, to make sure you have safeguarded your most valuable asset – your ability to earn an income.

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6 Insurance Myths – Busted!

Like any industry, there are some persistent myths and misunderstandings around insurance. We are absolutely passionate about what we offer as advisers, and the products that we select for our clients, so we’d like to clear up some common misconceptions.

Myth # 1: Insurance firms don’t pay out

The idea that insurance firms are trying to get out of paying claims is the biggest, baddest myth of them all. It seems to stick around, despite overwhelming evidence to the contrary.

Insurance firms do pay out, and the insurance providers we work with will pay 100% of legitimate claims.

If this is the case then, why do providers not pay out on all claims? Why is there a percentage that are rejected? The key word is legitimate – insurance providers must record all claims made and some will not be covered. The main examples are people trying to claim something that their policy doesn’t cover – either deliberately or through misunderstanding.

We are also guilty of contributing to these statistics. If you are unable to work and have income protection, we may advise you to start processing your claim before the stand-down dictated in your policy. However by the time that stand down has passed, it may have turned out that you are actually ready to return to work. That’s no problem for anyone involved, but statistically this will be categorised as a ‘declined’ claim.

These days there are multiple protections in place for consumers, and insurance is a very transparent industry. One of our insurance providers, Partners Life, even say “If it is grey, we will pay”. We often have the insurance providers give us tips on how to progress a claim so that it will be paid.

Myth # 2: I can’t afford insurance

When finances are tight it can feel like insurance is just another expense. However, what you really need to consider is if you can afford to not have insurance. Ask yourself, if you lost your ability to earn an income, how quickly would you be in trouble? How long would you be able to pay your mortgage?

One of the key advantages of using an insurance adviser is that we can work with you, and your budget, to get you the cover you need the most. Check out our blog here on which insurance you really need.

Myth # 3: If you don’t have an income you don’t need insurance

A common scenario we see is the main income earner has income protection and a non-earning spouse does not. While society sadly undervalues unpaid work, it contributes enormously to a household in different ways. The very real financial ramifications of a non-working spouse being taken out of action is something that should be considered.

Check out our blog, Are you both insured? Here is why you should be, for a breakdown of the whys and hows of insuring a non-income earning spouse.

Myth # 4: I am too healthy to need health insurance

Health insurance can seem unnecessary when you are young, fit, healthy and in the prime of your life.

We have two words for you: Pre-existing conditions. When you take out a new policy the provider will generally not cover you for something you already have. This could be conditions like skin cancers, a heart problem or diabetes. If you take out health insurance when you are in the best shape of your life your premiums will be relatively low. But, more importantly, when things do start to deteriorate you will be covered for them.

Myth # 5: You don’t need health insurance in New Zealand

This can be a tricky topic, and we are really lucky to have the healthcare system that we do in New Zealand.

However, we still believe you are better off with health insurance. The changing nature of our demographics indicates a significant future strain on our public health service. We’ve written more about it here. And, as we mentioned in Myth 4, covering yourself before you have problems sets you up for better coverage in the long term.

Myth # 6: It is easier to have insurance with my bank

All insurance is not created equal, and we are very cautious of policies offered by (and, at times, pushed by) banks. The policies offered by banks often fall short of the standards we expect from the providers we recommend to our clients. This includes non-standard exclusions in the fine print, a lack of transparency, a rushed application and disclosure process, and the sub-standard definitions of covered conditions, making them harder to claim on.

We have written here about the pitfalls of buying insurance based on short term incentives.

As insurance advisers we want the best for our clients, and we know insurance inside and out. If there is any aspect of personal insurance that you have questions about, get in touch with our advisers today.

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Income protection cover to the rescue

If Beverley Main could tell people one thing about insurance, it would be that even if the premiums feel expensive, it is worth it, because you never know what is around the corner.

Beverley has had a long relationship with Plus4, so when she got a new job with a salary raise and decided to take out income protection insurance, her Plus4 adviser helped her find the right policy.

However, after 15 years in a stressful job as Chief Executive, she found herself facing burnout, anxiety, and heart problems. Unable to work, she had to leave her job and come to terms with the realisation that she would never work again.

Beverley rang her adviser, Grant Uridge, to cancel her policy, as she no longer had an income to cover. To her surprise, he urged her to make a claim.

“It didn’t occur to me that I would be able to claim, but with Grant’s encouragement I went ahead, and it has honestly changed my life,” said Beverley.

Beverley had updated her policy as her income changed, and so had three income protection policies with Sovereign, and found her claim was covered by all of them.

When she left her job, she expected they would have to sell their home and downsize.  With her claim accepted she will be receiving the pay-out until she is 65, which has bought her five years to rearrange her life, and give her a quality of life she wasn’t expecting to have when she no longer had an income.

Beverley is enthusiastic about the help she received from Plus4. “I was very fragile when I called Grant to cancel the policy, and he was incredibly supportive. After what I had been through with my employer it was so nice to have someone who was on my side. He didn’t make any promises that my claim would be covered, but encouraged me to make the claim and see what would happen,” said Beverley.

She also speaks highly of Sovereign. “I had some preconceived ideas about insurance companies so I was blown away by the treatment I received from Sovereign,” said Beverley. “I expected everything to be a battle, but it was the complete opposite, they were so supportive and took away the stress.”

In order to have her claim covered, Beverley needed an assessment from a psychiatrist. Sovereign flew her and her husband to Auckland for the assessment. They also offered her three months of counselling and three months with a Pilates personal trainer. “They wanted to give me my best chance to get back into the workforce, however there was no pressure to do so if I wasn’t able. I felt so looked after, and I felt that they gave me my dignity back,” she said.

Beverley’s policies had included a premium waiver, which means that she doesn’t need to pay the premium on the policy while she is receiving the pay-out. “I had considered cancelling this two years before, but had been advised against it, and I am so glad I listened,” she enthused.

Beverley also recommends that people review their insurance regularly. “Because I reviewed my insurance every few years, and increased the cover accordingly, I am getting paid almost as much as I was earning. I think it is important to have more than just the bare minimum of cover,” she says.

If you want to make sure you have the right income protection for your needs, contact one of our advisers today.

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