"It is always strange to me that people will insure their home, their contents and cars, and yet neglect to insure their lives, health and income - surely the last 3 are the most important, and have the biggest impact when lost."
Mention the word "Insurance" and I immediately recall the day I first joined the ANZ Bank in 1975 and within hours I had a Life Insurance guy hounding me, wanting to meet up and tell me how he could help me! This was in the days of endowment investment policies and it turned out the Life Insurance guy was best mate with the Bank Manager who employed me. I never met up with the guy, but since that time I have taken out Life and other insurance and added to this over time as my personal and family circumstances change.
The thing I now understand about insurance is that it is required, not for minor things that happen regularly, like going to a doctor because you have the flu, but for major items that are less likely to happen but the financial consequences are significant and can result in long term loss of income and possibly placing your home and personal assets at risk.
Ok, so what is insurance all about? Here are some of the more common forms of insurance that may be right for you, exact definitions vary from one Insurance Provider to the next, but this is a brief overview.
LIFE INSURANCE: This can pay out a lump sum on death or diagnosis of a terminal illness. It is normal for this to cover your mortgage amount, funeral costs plus other debts such as credit cards, hire purchase and car loans. In addition an amount should be included to cover the likes of child care costs, education and family living costs for a period. One option rather than lump sum is to have a monthly amount which makes budgeting easier and takes away the issue of having to invest funds in what could be a very volatile market.
HEALTH INSURANCE: This is all about you having the choice to have, treatment when, where and by whom you wish. It is all about helping you get well as quick as possible and being able to see specialists, have tests and seek treatment as required. How many people do you know who are still waiting on the public health system or have to borrow funds against their own home or funds raise so they can have urgent Private health care.
INCOME PROTECTION: We all think that ACC will cover us if we are off work, but this is only if it is accident related. Most long term absences from work are illness related so there is no ACC just a very low Government benefit! Income protection provides an ongoing income and can also top you up if you return to work part time initially. Another form of income cover is loan repayment insurance. This can cover your mortgage payments whilst you are of work and can be paid in addition to any ACC you may receive.
TRAUMA OR LIVING ASSURANCE:Once upon a time a heart attack, stroke or cancer, were generally fatal but now, thanks to advancements in surgery and medication many not only survive but after a period of time can return to almost 100% health. Trauma Insurance is generally paid as a lump sum. This payment can help you during the recovery period and an amount equivalent to twice your annual income is usually a minimum but in some circumstances a similar amount as your Life cover is appropriate.
TOTAL PERMANENT DISABILITY: Total Permanent Disability cover pays you a lump sum if you had an accident or illness that incapacitates you to the point that you are unable to work. It can be used as you wish to meet expenses such as medical costs, possible alterations to your home, full time care or paying a lump sum off your mortgage. An amount equivalent to twice your annual income is usually a minimum but in some circumstances a similar amount as your Life cover is appropriate.
At First Rate Mortgages Ltd we prefer to refer our insurance to a Specialist Risk Adviser who is available able to sit down with you and discuss the many forms of cover with you.
To me, the choice of insurances is like sitting down at a really nice restaurant, with just so many courses, you really know what you’d like to have, but you have to choose what is best for you and your budget!
If you need help reviewing your existing life cover or advice on taking out new cover, especially if you are borrowing money for a home, call us to get sound advice that fits your budget. We are very experienced in assessing your personal insurance needs and this is often done as part of the process when helping low deposit first home buyers.
Contact us for further information:
or Freephone 0800 699 436