Question

I own a 5 person manufacturing business and have had an insurance agent telling me I need to make sure I have my business well insured. I have all the fire and general business insurances I think I need.

As you can see my business is small, we only sell to the local market and have good relationships with our few main clients. I do not think we need the extra life insurances, ‘key man insurance’, medical insurance and other things he is talking about. It seems very expensive and I’m not sure we can afford it even if we do need it.

Ron.

Russia’s largest bank is hoping more millennials will ‘Pika-choose’ their products after seizingPokemonGo on a way to capitalise on the gaming craze currently sweeping the world.

Sberbank is offering 50,000 rubles worth of insurance coverage, equivalent to NZ$1,125, for personal injury while playing Pokemon Go.

Players simply need to enter their details, including their Pokemon Go nickname, online to receive the cover.

There have already been reports of injuries to players who have been distracted or disorientated while playing the game, and Sberbank is hoping to gain from concerned players.

However, Sberbank life insurance CEO Maksim Chernin said there was also a higher game in play, rt.com reported.

“It is also important for us that the project will improve financial literacy, as the younger generation will be able to learn about insurance instruments while playing the game,” he said.

The bank said it planned to install special Pokestops modules that will lure Pokemon and players to its offices.

Procrastinate Later

Life. Take charge.

There's no dummy run, no take 2. It's a cliche, but true. From where we stand today anything is possible - the future can be whatever we want.

But taking action isn't always easy. Life puts roadblocks in our way. We're busy being busy. And sometimes the things we know we should do just aren't as exciting, so we put them off and plan to do them tomorrow, or next week, or 'sometime'.

There are lots of good excuses for not taking action - we get that. The challenge is to seize the day and make things happen. Turn do into done.

Take charge of life – the way you want to; start by taking care of your health and financial security .

 

Action Trumps Excuses

You're the best person to take control of your life, but it's often easier with a partner to help along the way. Someone to steer you in the right direction, cheer you on and help keep you on track. That's where Sovereign come in. Sovereign help you take control of your life should the worst happen.

Sovereign have started a movement to help Kiwis proactively take charge of their lives both by living healthily and by getting insurance over their financial security, helping them to remain in control should something happen

Call Jonathan at Bay Financial Partners on 07 578 3863 and get started doing life your way.

What is Share Transfer Protection?

Hand ShakeFor owners of businesses where there is more than one owner, one of the biggest concerns is how to make sure the business can change hands if something happens to one of the shareholders or partners.

For example, two shareholders own a business together and one of them became too ill to be able to continue.  How do the owners make sure that one owner can carry on with the business, and the other gets to withdraw their capital?

The solution is to put in place a plan that is triggered if a disaster happens.  This is how it works.

If any of these stories strike a cord with you call Jonath York on 07 578 3863 or email This email address is being protected from spambots. You need JavaScript enabled to view it. to discuss your insurance requirements.

Real Life Insurance Stories gathered by Sovereign

Troy – Real Life Insurance Stories http://www.youtube.com/watch?v=W5XArOoAkHs

 

Imagine if your employer gave you choice in the salary package that you could take. 

For example, what if you were given the following to choose from?

a.  Annual Salary = $50,000 plus 4 weeks annual leave, plus 7 days annual sick leave;   OR;
b.  Annual salary = $48,500, plus 4 weeks annual leave, plus 7 days annual sick leave PLUS 75% of your income is guaranteed until age 65 if you get too sick (or hurt) to be able to come back to work again.

Think about your choice carefully. 

You could get paid the top salary and take all the risk yourself of being able to go to work each day and continue earning an income.  Or you could forego a little of the income – but not your other employment benefits – in return for a guarantee that regardless of what happens to your future health you will keep earning money through your working life.

That is an enormous amount of potential risk that you can pass to somebody else if you want to, or you can choose to keep all the income and all the risk for yourself. 

Put some simple numbers around it to help weigh up the options.  If you are 45 and earning $50,000 p.a. through until age 65 then that is an even $1,000,000 in future income at risk – all dependent on you staying healthy and being able to go to work of course.  Would you be willing to trade perhaps 3% of that to secure most of your future income for the rest of your working life?

Your employer wouldn’t ordinarily give you this choice, but you can arrange the package with a little help.  The difficulty most of us have is not actually making the choice; it’s knowing what choices we have.  Working out what is really at stake, what the chances are of different things happening, and working out what “risk management” strategies can be used is where [we] [THE ADVISER] can help.  

Income Protection Insurance is not the only consideration.  Your entire personal financial situation is critical in identifying the right moves – Bill Gates doesn’t need insurance, but he still uses a financial adviser to work out what his choices are.  In working out your best strategy you will need to take into account things like ACC and other benefit assistance.  For example, WINZ provide a Sickness Benefit – if you are a single person you can get $225.03 per week (before tax), which might be enough.  If you are married the benefit is much more generous at $375.04 per week (before tax).

If the benefit assistance doesn’t seem enough for you then you might want to review what is enough.  Calculate what is actually at risk, what choices you have for managing it, what the cost of transferring it to another party is, and then be able to make an objective decision about the best “package of benefits” you can give yourself.

The ability to have salary certainty even if you are unable to work because of illness or accident during your working life is not actually something your employer can take care of for you.  It is your choice on how you use your salary package, and what risks you keep though.  It is also without doubt an area where sound financial advice can provide enormous certainty and value for you.

Reference: Sickness Benefit details Work & Income NZ, at 1 April 2011

If you already have Life Insurance you need to know about this.

If you don't have life insurance then you probably want to know about this...

Should have known.A pretty standard feature of most life insurance policies today is something that none of us really like to talk about: Terminal Illness Benefit. It is a way of paying out the life insurance while you are still alive if you have been diagnosed with a terminal illness.

Nobody actually wants to claim on their life insurance. Not ever. The sad reality is that many people aren't fully prepared for the financial impact on themselves and their families if they are diagnosed as being terminally ill.

What is even more sad is many clients forget about this benefit in their life insurance policy in their time of highest stress...and it is there waiting to be used.

Of course one of the things to be aware of is that often when somebody has been diagnosed with a terminal illness and the life insurance benefit is paid out, much of the insurance money goes on trying to provide the best possible treatment and care. That is perfectly logical, reasonable and to be expected. It often presents an issue for the surviving family though.

Sovereign LogoSovereign have revamped their Health Insurance Policies

Private Health Cover and Private Health Plus policies offer access to timely private treatments and choice of medical provider. Whether you need diagnostic scans, surgery or ongoing help with recovery, you can be sure that your health is their priority.

Key reasons to consider Soverereign Private Health

  • Generous cover up to $300,000 per year for conditions requiring surgical treatment.
  • Cancer care at every stage, including diagnostic imaging and tests, non-Pharmac approved MedSafe indicated chemotherapy drugs, prostate brachytherapy and breast reconstruction.
  • Treatment in Australia (subject to policy maximums and reasonable charges).
  • Treatment overseas if the wait for private practice in New Zealand is longer than six months.
  • Credit on next year's premium if public system is chosen for treatment that Sovereign would otherwise have covered (minimum two-night stay required).
  • Private Health Plus provides all the benefits of Private Health Cover plus up to $10,000 per year for consultations and up to $100,000 per year for diagnostic imaging and tests.
  • With Private Health Plus, you enjoy extra loyalty benefits such as $750 per year contribution to pregnancy, maternity or infertility care after three years, and $500 for health screening after three years.

If you don't have Health Insurance or would like us to compare what you do have with Sovereign's Private Health or the other Insurance companies new policies available give Jonathan a call on 07 578 3836.

questionThere are 3 key things that will determine what life insurance costs you:

  1. Your age
  2. Your health
  3. Your lifestyle

People often wonder why insurance companies charge different prices for different people of the same age, and the answer is because they present different risks of suffering death, critical illness or disability.

While the odds of suffering from any of these are roughly the same for a large group of people who are all the same age, the different health history of the individuals makes a big difference to the risk.

It might not even be the health history of the individual themselves, but their family history. Say you are a pretty healthy 40 year old with no major medical incidents in your life, but for 2 generations close family have been having heart attacks in their mid-forties. That is statistically significant and changes the risk for you as an individual, so insurers treat that case differently to all the other people in the same age group who do not have that sort of family history.

The other big factor that goes into working out whether people are higher or lower risks than others of the same age is “lifestyle”.

One of the most popular forms of personal insurance cover in the developed world is Critical Illness cover - and for very good reasons.

Yet in New Zealand it is still relatively unknown to most of the population, and most New Zealanders are more at risk than they realise.

TraumaBefore considering the case for Critical Illness, we should dispel some myths.  Critical Illness is often referrd to as "trauma insurance", and it becomes an implied understanding that anything that is a "trauma" might be covered.  This is not the case, as trying cover anything that might be traumatic (which could vary enormously from person to person) is nearly imposible to calculate.  To make it clear for people wanting insurance to step in while they are alive and suffering from a major critical condition, the insurers provide a list of covered conditions that you are insured for.  There can be quite a number of conditions on a Critical Illness policy that would trigger a claim, however the most common claims come from a relatively short list of very serious health conditions.  The purpose of this type of cover is to provide money to people when they need it most, after suffering a specified major health problem - an still being alive.  It is sometimes known as "living insurance" for that reason.

Trauma Insurance pays you a lump sum if you suffer a major trauma.

Have you ever thought about what your life might be like if you became seriously ill or injured?

TraumaThere would be many uncertainties that none of us want to be faced with, for example:

  • Will I survive this illness?
  • How will I pay my mortgage?
  • Am I getting the best treatment possible?
  • How will I adapt to the physical limitations that I now face?

Trauma Cover gives you financial freedom to make your own choices, at a time when your health has been seriously affected, and you may have to rethink your future.

Here are a few examples of how Trauma Cover has helped some of our clients:

There are two main types of disability insurance, and they get mixed up and confuse many people.

The first is "income protection insurance", sometimes called "disability cover". It basically tries to replace part of your income if you are unable to work because of sickness or accident for a period of time.

Total & Permanent Disability (TPD), as the name suggests, is quite a different thing. This is the second main type of disability insurance though. At the risk of stating the obvious, the difference with this one is you have to be permanently disabled....the "totally" disabled part depends on what type of policy definitions you have. The definitions of what is "totally" disabled can vary enormously from policy to policy – even within the same insurance company.

TPD covers you if you become totally and permanently disabled as a result of an accident or illness and are never likely to return to work again in the opinion of medical specialists.

It will not cover any temporary disability or disablement.

TPD cover can be bought alongside (or inside) a Life Insurance policy or can be bought by itself. Claims will generally be paid as a lump sum payment.

Usually clients have a choice of buying a policy that covers them for their "own occupation" or for "any occupation". "Own occupation" policies are more expensive as the odds of being able to carry on in the same occupation are not as good as the chances of being able to partially recover and do something completely different for the rest of your career.

Most people will be better off with "own occupation", although it is not always available for some occupations.

Some companies offer a third definition aimed at people who do not work, which is basically a 'home maker' definition. This recognises the very real financial benefits that a "stay at home" parent or caregiver provides to the entire family unit, and more importantly – what it might cost to replace them if they need long term care.

As a basic rule, consider getting a TPD policy added into your life insurance policy to cover mortgages and debts, anticipated medical costs in the event of a disaster, rehabilitation costs and any replacement for lost future income. If in doubt about how much that adds up to, then seek professional advice.

 

Insurance is a basic part of everybody’s financial planning - even those who don’t think they are planning. But why? What’s the point?

Insurance - in any form - is about “risk transference”. When you consider risks, what happens is you form a view about the personal impact of losing your assets (the risk), and then decide whether you can assume the entire cost yourself or whether you wish to pay a relatively small price (a known loss) instead, and transfer that risk to somebody else. That’s all insurance really is: taking a little hit so you can pass the big hit, if it happens, on to another party.

But usually we don’t really know the odds. What are the chances of the things we dread actually happening? We make subjective assessments - not objective ones. Apparently the chance of these things happening in your working life are:Two red die

  • Your house being totally destroyed by fire is 5%
  • Dying before you turn 60 is 13%
  • Writing off your car in an accident is 20%
  • Suffering a 6 month disability is 33%

The last one leaps out as being a really statistically “significant” risk doesn’t it? According to research conducted in NZ in the mid 1980’s, more than 5 out of every 6 “disabilities” were caused by illness, and not covered by ACC. Some 275,000 Kiwi’s were temporarily disabled each year - two thirds of them being out of action for a month or longer.

The chances of being disabled for six months was more than six times as likely as your house burning down. Nearly everyone has fire insurance but few insure their income.

middleagedcoupleWhy Do Different People Pay Different Premiums for the Same Life Insurance?

There are 3 key things that will determine what life insurance costs you:

  1. Your age
  2. Your health
  3. Your lifestyle

People often wonder why insurance companies charge different prices for different people of the same age, and the answer is because they present different risks of suffering death, critical illness or disability.

While the odds of suffering from any of these are roughly the same for a large group of people who are all the same age, the different health history of the individuals makes a big difference to the risk.

It might not even be the health history of the individual themselves, but their family history. Say you are a pretty healthy 40 year old with no major medical incidents in your life, but for 2 generations close family have been having heart attacks in their mid-forties. That is statistically significant and changes the risk for you as an individual, so insurers treat that case differently to all the other people in the same age group who do not have that sort of family history.

How Much Insurance Do My Family Need?

threekidsPretty much everyone with a family says at some point “I must have some life insurance”. The problem is usually then trying to figure out how much is the right amount.

The following are generally the questions that need to be considered, and which help to figure out how much is enough.

au'ditn. & v. Thorough examination of financial position by qualified authority. To examine, scrutinise, probe, verify, overhaul, balance and monitor.

The word "audit" usually sends shivers down the spine...but it does have a very positive purpose. It is an examination by a qualified authority that scrutinises and verifies that all is well.

An audit of your personal financial arrangements will uncover whether investments are diversified and balanced taking into account your view of risk and long term objectives. It will also uncover whether you are paying too much for insurances, or if you are now paying for the WRONG TYPES of insurances due to changes in personal circumstances.

New choices are provided to the market regularly, some of which are better than what clients currently have (but only sometimes!).

An audit of your existing portfolio of products will reveal whether what you are paying for is still right for you.

Call Jonathan York on  07 578 3863 for a free, no obligation audit of your insurance policies.

There has been a lot of attention by the financial services industry, consumer groups and the media on the level of "underinsurance" in New Zealand.

Its a puzzleWhile there is a very high use of general insurance (covering personal assets and belongings), there is generally a very poor level of personal protection agains a variety of personal risks such as loss of income or loss of life.

4 Most Common Reasons for Being Underinsured

  • High premiums for personal insurance plans.
  • Lack of understanding the types of insurance products.
  • Lack of trust in insurance providers.
  • A market perception that because of ACC, EQC and other government support systems that there is little need for personal insurance.

Why are Premiums So High for Personal Insurance Plans?

Personal insurance plans include income insurance plans, life insurance plans, total and permanent disability insurance and trauma insurance plans. Personal insurance plans do not include home and contents insurance plan. Personal insurance plans are premium plans meant to help you during hard times where you may need financial support.

Premium rates can be on the higher side as some insurers have a different view of certain risks to other insurers. However generally, the premiums (or prices) reflect the actual risk – so the more expensive polikcies tend to be the ones where there are more claims, or claims of higher amounts in value. Higher premiums at an individual level will reflect the different risk that any one person is compared to the wider market. For instance, a smoker wil pay higher premiums because there are myriad health impacts that statistically will affect a higher proportion of smokers than would otherwise be seen in the general population (including non-smokers).

In its simplest terms, insurance premiums go up when the cost of paying out claims increases.

When it comes to medical, or health insurance, the claims increase as clients get older and therefore premiums have to rise to fund the claims.

There are several other significant factors that contribute to the increase in premiums:

  1. Access to the public heath system often takes longer, so private health insurance pays a higher price for quicker access.
  2. New medical technology is very expensive; so new treatments and new drugs push up medical expenses much faster than many other costs
  3. New Zealand’s population is getting older on average, and increasing in its reliance on the health system.

The chart below shows quite clearly that the average claims costs increases the older clients get, which is the key driver of the increasing premiums.

Insurance Claims by Age

If you are concerned about your the existing health insurance coverage or its costs then you should review it. Please don't just cancel health insurance without considering your options, for example you can probably reduce your premiums by increasing your excess.

One of the most commonly used, but most misunderstood, insurance policies is Critical Illness cover. Sometimes called "Trauma Insurance" is a lump sum of money which gets paid out if you suffer from one of the defined illnesses listed in the policy.

The big illnesses are the ones you'd expect – cancer, stroke, cardiac conditions. They account for the overwhelming majority of the Critical Illness claims, and most people are familiar with them because we see them all the time. Everyone knows a family member, co-worker, friend who has suffered from a critical illness – it is actually quite common.

Critical illness insurance is a unique product, which is designed for the living. You may well survive a critical illness, but there will certainly be a financial loss that you may never fully recover from. Here are some ways that clients use their Critical Illness cover:

  • Leave of absence for you or your spouse
  • Child care costs
  • Domestic help
  • Costs of medication that the public system might not provide
  • Alternative treatment which can be costly but effective
  • Treatment outside of NZ
  • Time away from work to properly recover
  • Nursing home/private nursing care costs
  • Make changes to your home or vehicle if required
  • Repayment of your debt
  • Ability to change jobs if you so choose
  • A recovery vacation with loved ones

Business owners will use critical illness insurance to provide much-needed funds to:

  • Cover business expenses
  • Shareholder buy-out
  • Key person coverage
  • Corporate debt repayment
  • Provide cash for family members to come into business

Why insurance is important, you never know when you might need it.

Insurance is viewed by many as a necessary evil, in the perfect world it would be nice to be covered for everything but unless you have several thousand dollars to cover the premium that is just not feasible in the real world.

What should insurance cover?  Most people use insurance to cover their debts i.e. their mortgage and this isn’t just the accident cover that the mortgage broker or bank will try and sell you at point of entry. You need life cover to pay off the debt in the unfortunate event of your death. Then if possible it would be nice to give a lump sum to help your partner or children through their life – this could cover educational fees or setting up a business for your now single partner. The alternative is a possible forced sale of the property to cover the debt which just adds to the current stress levels.

The most important asset you have is your income but very few people cover this, ask yourself what would happen if your income ceased today? You need cover for this, but which type indemnity or agreed value, put simply do you want to know how much the insurance company will pay out at claim time or do you want to have to provide proof at time of claim? I know which one I would prefer.

Health is another area to cover, not the whole shooting match but just the basics, hospital and specialist should suffice, you can get a more comprehensive package but it all costs.

Trauma and Total Disability, certainly in today’s world there is much more Trauma, and if you had a stroke how would you cope? I suspect it would be difficult but if you had a lump sum payment of say $20,000 it might just make life a little easier over the near term. What this does is gives you time to sort out your situation rather than being pressed into a hurried decision which you may regret at a latter date.

What insurance does is gives peace of mind that if the unfortunate happens you and your loved ones will have some financial support to help in the immediate aftermath and this gives you time to arrange your affairs to be able to cope with your new found circumstances.

As an example. I have clients who were finding the life insurance expensive, and wanted to cancel 15 months ago. They called me and we discussed what could happen if the cover was cancelled. They still had some debts to cover and with no insurance they may have to sell their house. We discussed and trimmed the insurance a tad and made some other minor changes but left the level of cover more or less intact. Last week I got  a call to say  one of the couple has just been diagnosed with terminal cancer, now while this is devastating, because they have the insurance in place the terminal payout will kick in and the ill partner will be able to pass away knowing that their partner will have no financial worries. The grief of the loss of their partner will be tough enough.

Call Jonathan York on 0800 867 323 to discuss your insurance needs or email This email address is being protected from spambots. You need JavaScript enabled to view it..

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The information on this site is intended as a guide only. The information is of a general nature and does not and cannot ever constitute personal advice.
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