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5 things to think about when writing your will

While everyone knows it is important to have a will, it can be hard to know where to start. Having an up-to-date will makes everything easier for your loved ones and means your assets and taonga are distributed as you wish, and without unnecessary delay.

Here is what you need to consider when writing your will.

1 – Who is writing your will

The first thing to decide is who will write the will. The best choice will depend on your budget, level of experience and the complexity of your estate.

  • Visit a lawyer
    Most lawyers create wills for their clients. As you need to use a lawyer when you purchase a home this is often a great opportunity to get your will done as well. Some lawyers provide will packages and some charge by the hour, so depending on the complexity of your will it may be worth shopping around.
  • Trusts
    Many trusts will help you write your will for free which is a great service. They can come with a heavy administration fee – so make sure you know all the details first.
  • Do-it-yourself
    There are several DIY options, from booklet style kits to online templates. Make sure you do your research so your will is legally sound.

Whoever you choose to write your will, make sure key people know where to find it when it is needed.

2 – Beneficiaries

In short, you need to decide who is going to get your stuff, also known as your estate. Your estate encompasses individually held assets, such as property, cars, Kiwisaver and other investments. Jointly owned assets pass to the co-owner, and do not become a part of the estate.  

There are two types of beneficiaries to choose for your will – primary and contingent. The primary beneficiary is your first choice to inherit your estate, such as your spouse. The contingent beneficiary is the next option, if the primary beneficiary has died or cannot be located, such as children, a parent or a sibling.

3 – Bequests

While you choose a beneficiary to inherit your estate, you may also wish to give gifts or a sum of money to others as well. This is called a bequest.

A bequest could be a donation to a charity, a sum of money to someone who isn’t a beneficiary of the will, or a specific item, such as jewellery or art, that you wish to go to a particular person. You can also bequest your body to science (you need to have forms signed by yourself and an immediate relative) and you must bequest any firearms you own to someone that holds a firearms license.

4 – Guardianship

Choosing guardianship for children is often the reason people write their first will. Trying to choose that person is also a reason people put it off. If your children are under 18 years of age, you need to appoint someone to make decisions for their care and wellbeing. This person is a testamentary guardian.

It is important to understand that the guardian’s role doesn’t necessarily include the day-to-day care of the child or children. They will make the decisions about how they are brought up, and by who. This means you can appoint someone whose judgement you trust and discuss with them the various options for raising your children – which can change throughout your child’s life.

5 – Financial planning

If you are responsible enough to be making a will, we hope you also have life insurance in place. In setting up your insurance you need to consider various scenarios and where this money would end up. For example, if you have given someone guardianship of your children – how will you fund that?

It is also important you understand what happens to your debts when you die, so you can include that in your planning.

This is a lot to think about, and can lead to some difficult conversations. At Plus4 we see how much easier it is on everyone when there is an up-to-date will in place, and how much harder it is when there isn’t.

We provide our clients with a template they can use to help plan their will. Using this template means you can go over it in the privacy of your own home and work out the details before you see a professional. 

If you want to discuss your life insurance, or would like a copy of our will template, contact one of our advisers today.

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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

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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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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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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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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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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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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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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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The Four Pillars of Plus4 Insurance Solutions

At Plus4 we have a promise we make to our customers: “Choosing the best of the best for you”. This promise represents our point of difference, is the statement that we live by, and has remained unchanged since Plus4 was founded.

In addition, our practice is founded on four core principles or pillars, Best for You, Advocacy, Local but National, and Relationships. These principles four pillars guide us in choosing the best personal and business insurance cover for each individual client.

Best for You

We select the best for you – by using independent research combined with the collective experience of Plus4 Advisers. We believe this gives us a level of transparency, which means you can trust our advisers to give you independent advice.

We start by assessing the independent product rating. This gives us an indication of how the different policies stack up against each other, by looking at their policy wording at an in-depth level. Insurance is only as good as the fine print that it is written with, which is why we use independent research to qualify the products we use. It means our selections are not based on our opinion, or the relationship we have with providers.

We use independent research houses, including QPR, Iress, and Plantech, which research all the products on the market and give an unbiased analysis of the features of each.

It is worth noting that while insurance houses open their products to these independent reviews, there are a number of banks who provide insurance, that do not. In our view, this is because ‘in-house’ bank insurance products often rate very poorly in these independent reviews.

The second element we examine is the provider’s financial strength rating. This is rated by A.M Best, and Standard & Poor’s (Australia) Pty Ltd, and gives an indication of an insurance provider’s solvency and ability to pay out on claims. There is no point in us helping you get good coverage if the provider can’t pay out at claim time! It’s worth noting that there is also legislation ensuring insurance providers are able to cover their claims, and this was tightened after the Christchurch earthquakes.

Lastly, we look at the claims rating of a provider, which means how many claims they have approved versus how many they have turned down. For example, Sovereign pay 96% of all claims, which is considered a very high rating. It is most likely that the bulk of the 4% they didn’t accept were claims that shouldn’t have been made.

If a provider has a low claims rating, it is an indication that they may have non-industry standard clauses in their fine print, or less-than-stellar business practices. We want the best coverage for our clients, so this means we will avoid these providers.

Advocacy

Through the strength of Plus4, we are able to help achieve the best possible policy terms during the application process and deliver the most successful outcome at claim time.

If we believe a claim has been unjustly denied, our Claims Advocacy Team will get together and take a closer look at the wording of the policy, the circumstances of the claim and appeal to the insurance provider on your behalf, at no cost to the client. We have had tremendous success in this space, in the rare event that we do experience claims issues.

Read more about our Claims Advocacy Team in our article here.

Local but National

From Whangarei to Invercargill we have 44 advisers, working from 28 locations. This means not only is there is an adviser near you, but that adviser is also supported by our head office and the entire national team.

Relationships

Of utmost importance to the way we operate is developing trusted relationships that last. Providing you with confidence in your choices and at claim time, we are your personal insurance advisor and are with you to help throughout every stage of your life. This means when your circumstances change we are there to make sure you still have the best coverage, and should need to make a claim we are there to help you through it.

Lastly, overarching and supporting our four pillars is the independent best practice review process. We engage a company to conduct an annual review of Plus4 advisers to ensure we are complying with legislations, regulations and codes of conduct. This is not a requirement of the industry, but something we take on voluntarily because we believe it provides another layer of transparency and assurance to our clients.

To make sure you are getting the best insurance coverage, from a passionate and professional adviser, contact one of our team today.

The circumstances of every claim are unique, so always talk to your adviser about your circumstances and your policies when making a claim – we are here to support you through this process. 

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Do you know about our Claims Advocacy Team?

When you get your life insurance, trauma cover, income protection insurance or health insurance though a Plus4 adviser, you automatically have access to the Plus4 Claims Advocacy Team. This is a great benefit, let us explain why.

If we believe a claim has been unjustly denied, this team will get together and take a closer look at the wording of the policy, the circumstances of the claim and appeal to the insurance provider on your behalf.

While this isn’t a legal service, it provides another layer of accountability to the insurance providers, and is a good first step before escalating a claim dispute to the ombudsman (the Insurance and Financial Services Ombudsman Scheme resolves complaints about insurance and financial services.)

Our Claims Advocacy team are rarely assembled, as we find our customers seldom have claims denied. There are a few reasons for this:

  • Insurance providers pay out
    It might sound a bit simple, but it is true. If everything in your application is in order, and the event is covered in your policy, insurance providers pay 100% of all legitimate claims.
  • Our customers have bought their policies through an adviser
    A simple way to increase your chances of having a claim covered is by buying insurance through an adviser – just like Plus4. We read the fine print, so we always confirm that what you are buying covers your circumstances. This means you are unlikely to have a nasty surprise at claim time.
  • Our customers didn’t buy their policies through a bank
    If you have bought your insurance through an adviser, it means you didn’t buy it through a bank. We have written before about our reservations regarding buying insurance from banks, including non-industry standard exclusions, which can lead to claims being denied when they may have been otherwise covered.
  • The importance of full disclosure
    On the rare occasions claims are denied, it is usually the result of a lack of disclosure. When we help clients choose a policy, we also guide them through the paperwork for the application. The paperwork can seem like a hassle at the time, but the effort pays off when it comes to making a claim.

If you want to know more about our Claims Advocacy Team, or talk about making sure you are covered come claim time, get in touch with one of our advisers.

Plus4 Claims Advocacy team

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Do you need life insurance? And how much?

Helping our clients with life insurance is a key part of what we do here at Plus4. It’s an important topic, so we’ve answered some of the most common questions people ask us.

  • Do I need life insurance?

What sets life insurance apart from other insurance policies is that it is generally not for you.

Life insurance is almost always for someone else, so the question is best answered by looking at your circumstances and the people you care about. If there would be a financial shortfall created by your untimely departure, then yes, you definitely need life insurance. On the other hand, if you have a freehold home and no dependents, then your need for cover may be minimal, if at all.

  • How much life insurance do I need?

Again, we need to go back to remembering that it isn’t about you. So, it is better to frame this question as how much life insurance do they need. An exercise we take clients through is to think about the value of your income to your family over the next 20 years. That could be the loss to your family if you are not around.

This is a complex question, with so many variables, and answering it is one of the times where the value of using an adviser shows. Having someone who will sit down and get to know you (and get a grasp on your life stage, your budget and your values) makes a world of difference in deciding how much life insurance you should have.

Key factors to consider include covering any debt, replacing ongoing income, covering a mortgage and what kind of lifestyle you want your loved ones to lead. If you have dependants you will also need to think about how to provide for the people that will be providing for your children, and how you will structure a pay-out should both you and your partner be gone.

  • Who gets my life insurance?

Most policies are set up to be jointly owned, by both the insured party and the intended recipient. This makes everything smoother at claim time. It also means that it is important to update policies should there be a change in your relationship status.

If the situation arose where both policy owners were deceased, the insurance pay-out would become a part of the estate, or go into a trust if one was set up. Read more about setting up a will here.

  • Is there any way I can access my insurance benefit before I die?

There is a Terminal Illness Advance in most life insurance policies, which means if you have a terminal illness and are likely to die in 12 months you can receive your full insurance pay-out ahead of time.

  • So, what happens when a policy holder dies?

One of the huge advantages of having an adviser is that we are always available. You can call us if something happens and we can help you through the process, every step of the way.

Upon receiving notification that a policy holder has died, most insurance providers will immediately release $10,000 to $15,000. On receipt of a death certificate, the remainder of the pay-out is released, which can take a few days.

Check your life insurance policy regularly

It is important to remember that life insurance shouldn’t be static, it should match where you are right now. This means as your family or your assets grow, you may need to increase your sum insured. Then, as your children become independent and the mortgage goes down, so should your sum insured.

This is one of the big differences between and insurance salesperson and an advisor – a salesperson wants to sell you insurance; while an advisor is in it for the long haul. An advisor will make sure you have an appropriate amount of coverage at each stage of your life.

Read more about when to update your policies here.

Life insurance could make a big difference to the ones you leave behind

On a final note, we can all agree that no one likes paying premiums, but everyone is grateful for insurance when they need it. We have never heard anyone say they had too much insurance at claim time.

If you want to get life insurance set up, or review your insurance policy to make sure your sum insured isn’t too high or too low, get in touch with one of our advisers.

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Why you need a will, and how to write one

Everyone knows that having a will is really important, but it can seem overwhelming and hard to start the process of creating it.

Like having life insurance, health insurance and trauma insurance, the benefits of a will are easy to appreciate. It is all about looking after the people we care about should something happen to us. It also makes things easier by ensuring both your assets and any taonga are allocated as you wish, and without any unnecessary delay.

How to write a will

If you don’t have a will we strongly recommend getting one in place as soon as you can. There are a number of ways you can go about this.

  • Visit a lawyer
    Most lawyers create wills for their clients but, as they are charging by the hour, this can be an expensive process.
  • Trusts
    Many trusts, like Public Trust, will offer to help you write your will for free. This can be a great service, as they do they really know their stuff. But, be aware that they can come with a heavy administration fee – so make sure you know all the details first.
  • Do-it-yourself
    There are a number of DIY options, from booklet style kits to online templates. If your will is likely to be straightforward, one easy and legally sound option is the online tool My Bucket List, developed by New Zealand lawyer Mai Chen.

At Plus4 Insurance Solutions, we provide our clients with a template they can use to help them identify what they want their will to include. There are two good reasons to use this template. Firstly, you can go over it in detail in the privacy of your own home and hash out the details. Secondly, once you have done that you can then take it to a lawyer. As you have already done most of the decision making, it will save you time (and therefore money) on legal fees.

What you should consider

Before you write your will, there are a few issues to understand and consider. While it can be unpleasant to deeply consider the consequences of our own passing, it is important to remember that your will is not for you, but for the people you love.

  • Beneficiaries. There are two types of beneficiaries – primary and contingent. The primary beneficiary is your first choice to inherit your estate, such as your spouse. The contingent beneficiary is the next option, if the primary beneficiary has died or cannot be located, such as your children or a sibling.
  • Bequests. A bequest is a gift given in a will. This could be a sum of money donated to a favourite charity, or to a person who is not a beneficiary of the will. It could also be an item, such as jewellery or heirlooms, you wish to be given to a specific person.
  • Guardianship. Deciding who gets your grandmother’s piano is far easier than choosing who will care for your children in your absence. You can appoint someone in your will to take over guardianship, if your children are under 18 years of age. This person is a testamentary guardian. It is important to note their role doesn’t include the day-to-day care of the child, or children, but they can make major decisions about how they are brought up, and by who.
  • Financial planning. If you are responsible enough to be making a will, we hope you also have life insurance in place. In setting up your insurance you need to consider various scenarios and where this money would end up. For example, if you have given someone guardianship of your children – how will you fund that?

If you want to discuss your life insurance, or would like a copy of our will template, contact one of our advisers today.

Why you should have a will

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7 steps to getting the best insurance cover

Want to get the best insurance cover for you and your family? Here is how you do it:

Using an adviser is always going to get you the best life insurance, income protection and health insurance to suit your budget, lifestyle and life stage. However, some people can be put off by thinking it is a service they pay for, or just not understanding how it works.

The first thing to note is that you don’t pay us for our services. We don’t want getting the best cover to cost our clients so we don’t charge you. Instead, we are paid by the insurers.

Here is our process to break it down for you.

  1. Find an adviser

We get most of our clients through word of mouth. Finding someone who is local makes it easier for you – it is good to be able to meet in person. We have advisers all over New Zealand, check here and find an adviser near you.

  1. The first meeting – Relationship Building

This usually takes under an hour and is a “Getting to know you” session. We want to have a really good understanding of your situation to ensure we can give you the best advice. This includes your budget, your lifestyle and what you want to happen should a crisis arise.

This initial meeting can take place at our offices, at your workplace, or we can come to your home – we’re even happy to come by in the evening after you have put the children to bed!

  1. The Research Phase

After the initial meeting, we have a good idea of what you are after, and we go into research mode.

This means we look at the offerings of a range of different providers, to find the one that best suits your and your circumstances. The independent research we carry out is a key way that we add value to our clients. We then drill down into the fine print to make sure it all stacks up and that we can substantiate our recommendations to you.

  1. The second meeting – Presenting the Plan

We get back with the client and present the plan we have put together.

We need to allow at least an hour for this meeting (and again we can meet wherever suits you best), as we present the plan and then go through the application process. The time it takes to fill out the application can vary – for example, if you have any health issues that need to be considered.

We also fill out payment forms at this meeting, so everything is ready to go once your application is approved.

  1. Approval

If everything is clear-cut, we hear back from the provider and give you a call to say it is all ready to go. Sometimes, as a result of the information provided in the application, the provider may come back with questions or variations to the policy. This is something that your adviser will talk you through.

  1. Claim time

While we all take out insurance hoping to never use it, at some stage you may need to make a claim. We have written a blog on what happens at claim time (you can read it here), but what you really need to know is that if you have your insurance through an adviser, when it comes time to make a claim we will be there to support you, walk you through it and advocate for you.

  1. Follow up

So, we have set up the best policy for your current circumstances, allowing you to get on with life knowing you are covered. However, life changes. To make sure your policies keep up with your life, we check in with you to find out if anything has changed and make sure you still have the best policies to meet your needs. (Here are some of the life changes that might lead to policy changes).

Are you ready to get the best insurance cover? Or do you have questions about how it works? Give one of our advisers a call today.

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How does your mortgage influence your insurance choices?

Getting adequate insurance cover is an important part of the getting-a-mortgage process – and one the bank wants taken care of before things go further. This includes life insurance, trauma insurance, income insurance and, of course, mortgage insurance.

Often when insurance advisers discuss personal insurance needs with a client we use their mortgage as a starting point – which of course is not to say it is the only factor to be taken into consideration. But your mortgage does influence the types of insurance you choose, and how much insurance cover you need to have.

Here is a break down of the different personal insurance types and how they relate to your mortgage.

Life insurance

The size of your mortgage is a really good place to start when deciding how much life insurance cover to get. Knowing that, should something happen, those left behind do not have to worry about mortgage payments and losing their home provides significant peace-of-mind.

From there you need to think about your lifestyle, any debts that need to be covered and how long the beneficiary needs to be able to live on the insurance.

Income insurance and mortgage protection

There is a perception that income protection is expensive, but you don’t actually need to cover your entire income. We have written before that your greatest asset is your ability to earn an income and recommend you read that blog to grasp the importance of income protection, but in relation to your mortgage you should also think about mortgage protection.

You cannot claim income protection and ACC at the same time – this is because the Insurance Act states that you cannot be better off on insurance than you would be if you were working.

However, mortgage protection is a subset of income protection designed to cover your mortgage repayments should you be unable to work. Importantly it has no offset clause – this means if you are unable to work you will receive your mortgage cover payments, regardless of whether you are also covered by ACC or by your income protection.

When you set up a mortgage protection plan you can choose how quickly you want the cover to start, such as four weeks, eight weeks or twelve weeks, and how long you want the cover to continue – anything from three months to the end of the cover term.

It is important to note that more providers are now offering rental cover as well which works along the same lines as mortgage cover.

Trauma Cover

Trauma cover can also be used to cover your mortgage payments. The key advantage of trauma cover is that it is a once off pay out for a traumatic medical event (read more on our blog post here about how it works) and you can use it how you best see fit.

The main point to remember is that everyone’ s circumstances are different, and sitting down with a adviser and talking about your mortgage and lifestyle will help them come up with the package to best suit your personal needs. So call one of our advisers today to discuss getting the best insurance cover for your mortgage.

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Is that short term incentive really best for your long term insurance plan?

We are all keen for a bargain when we can get one, and getting personal insurance cover is no different.  But the reality is that jumping on board with a policy because of a special offer is rarely a good move in the long term, and as we have discussed before personal insurance, be it income protection, life insurance or health insurance, is a long term game.

The famous Stanford marshmallow experiment of the 1960s looked at delayed gratification. A child was offered a choice between one small reward provided immediately or two small rewards if they waited for a short period. One third of the children were able to delay long enough to get their reward.

While we would like to think that we are all smarter than a child offered a marshmallow, one of our brokers recently confessed to refinancing their mortgage because they wanted the TV that was on offer. The immediate, tangible reward or saving right in front of us is hard to ignore for savings further down the road.

There are issues we come across again and again where people have chased the bargain and set themselves up for higher premiums or less thorough cover when they need it. While some of it we have said before, it is important enough that it bears repeating.

Beware the banks

We have heard of banks offering a discount on a mortgage rate if the mortgagee takes out their home, contents and personal insurance with the bank. At a time when you are looking at committing to a mortgage that is a fairly compelling offer.

But is it worth it?

Banks in particular have a less than stellar record with insurance. ANZ for example has a 36 month exclusion for suicide*, which is three times longer than the industry standard of 12 months, and an unlawful acts exclusion which is not an industry standard.

Insurance policies sold through banks also tend to cost you more in premiums than policies bought through a broker.

Watch out online

Buying insurance online can be appealing because it can be faster and seem more straightforward than visiting an insurance broker, and there are often promotions that look good. However the cover provided by online insurance companies rarely stacks up to that offered by brokers and the premiums are often higher. If you sign up during a special offer they can increase dramatically after a set period.

When you get a quote on personal insurance from a broker you will get a ten year projection on the premiums, so you have a good idea of what you are getting yourself into.

Ideally you should be changing policies as little as possible, as anytime you have to reapply you may have exclusions added as the result of changes in your health or lifestyle, which means you shouldn’t just jump from special offer to special offer.

The devil is in the details

While all the ins and outs of a policy are right there in the fine print, even if you read it do you know how it compares to other policies? We do. When you get a quote from us we know what is in the fine print of each of the policies we recommend for you, and can talk you through how these can impact you.

If something sounds too good to be true, or appears dramatically cheaper than other options there is usually a reason for that. If you feel you are being pressured into buying insurance from the bank take the time to talk to a broker about your other options. While you will end up with better quality of coverage through a broker you may find by looking at the ten year projections you save more than you would have through a lower mortgage rate anyway. Remember, there is a fine line between financial coercion and a financial incentive, one of which is illegal.

If you want to talk to someone, who has read all the fine print, about getting the best personal insurance cover for your circumstances, call one of our brokers today.

* As stated in “ANZ Life & Living Insurance Policy Document, 13 September 2015”

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Why you should consider a Level Term life policy

Did you know there are two different ways of setting 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 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 over 90 % 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.

Banks and other online insurance providers will often draw clients in with a great offer, such as 20% off premiums for a set period of time. If you are looking at getting a policy with a stepped premium it is highly likely that after that period of time is over the premiums will rise very quickly. And it isn’t advisable to chop and change policies every few years.

What is a Level Term?

With a level term policy you have the same type and level of cover as a YRT policy, just the way in which you pay your premiums differs.

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 that premium for the fixed term – however you are not locked into that policy, though breaking it loses you 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.

Level term cover infographic

While in the past it may have made sense to reduce your cover as you got older and life circumstances changed, these days we are having children later – and they are living at home for longer – and with the increase in house prices we 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 broker who knows 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, it is worth considering having 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 more or less cover may be needed. This is an area where having a broker 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 brokers today.

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