Author: Shai Patel

Four common Insurance mistakes

Shai Patel

With so many details to pull together, Insurance can be a complicated topic – especially if you’re not familiar with the jargon. Less than 10% of Insurance claims are not paid, and in most cases it is because of an avoidable mistake.

In this guide, we take a good look at the most common ‘insurance mistakes’, and how we can help you avoid them.

Unwitting non-disclosure

Insurance providers are fans of forms: that’s a given. And there’s a reason why Insurance applications come with so many questions: it’s a process called ‘underwriting’.

To determine your premium rates and policy conditions, the Insurance provider needs to gather all relevant information about you, including any past medical conditions and habits you may have (e.g. smoking). But what if your memory fails you when you’re filling in the forms?

Without guidance, it can be easy to overlook details that seem insignificant or simply forget about them, but it’s important to note that unintentional non-disclosure or misrepresentation could result in a future claim being rejected and even your policy being cancelled.

As your adviser, we can help you avoid unwitting non-disclosure – by asking the right questions and answering all of your queries.

The one thing that can jeopardise your claim

Once again, when it’s time to claim, being truthful is always a good idea. This includes providing the correct information – nothing more and nothing less than this.

Things like adding non-existent items to a Contents Insurance claim or falsifying receipts, for example, cannot just lead to a claim denial. They may put your future insurability at risk and even result in prosecution.

So please don’t hesitate to contact us: we can help you ensure that your claim is filed correctly, and do everything we can to ensure that the payout is fair, reasonable and quick.

Not reading the small print

Are you sure that you know what your Insurance does and does not cover?

Time spent reading the small print can be tedious, and it often creates more questions than answers. It’s one thing to identify all inclusions and exclusions; it’s another thing understanding their implications.

Needless to say, we know the ins and outs of your cover. Have any questions for us? Please feel free to get in touch.

Missing premium payments

Keeping up with your premium payments is also crucial. If you fail to pay for a certain amount of time, your policy could lapse, leaving you uncovered and unable to make a claim.

If it was an oversight, consider setting up direct debit: it will take care of it for you. But if – for any reasons – you’re finding it hard to meet your premium payments, please let us know as soon as you can. Working closely with your Insurance provider, we may find ways to help you manage your premiums without losing cover.
As you can see, there are a number of important things to consider. So reach out to us whenever you need assistance: we’re in your corner to make your Insurance journey as simple and smooth as possible, helping you avoid all the bumps in the road.

An Adviser Disclosure Statement is available free and upon request.

KiwiSaver in your online banking: is it worth it?

Shai Patel

Is viewing your KiwiSaver online at the bank worth changing provider for? Sure, getting an eagle-eye view of your finances in one place seems like a no-brainer – but is it really as convenient as it sounds?

Here’s why transferring your KiwiSaver money to the bank may not be the right move for you.

Reading too much into the short-term swings

Markets can fluctuate and change rapidly, with lots of highs and lows. But KiwiSaver is a long-term investment. That’s why it’s important to aim for the horizon: you’re in it for the duration, and so whatever happens in between, if you have a good plan in place, the scales should tip in your favour over time. Then, why check your KiwiSaver balance every week?

What if your balance drops?

Your KiwiSaver balance may change from day to day – sometimes for the better, sometimes for the worse. Watching these ups and downs unfold in real-time, day in day out, can create anxiety for many people. It may even lead you to make a rushed decision about your funds. As a rule of thumb, it’s a good idea to review your KiwiSaver performance every six months, if not annually. That way, you’re more likely to see a positive return.

Your KiwiSaver may not grow as fast as you’d like

It takes time (usually, around three months) for your KiwiSaver contributions to reach your account: in fact, after your employer pays them, they go to the IRD first; then, and only then, they’re paid into your fund. Once again, this is another reason why having your KiwiSaver in your online banking may not be the best idea.

 

Of course, having 24/7 access to your balances and transactions is a great way to keep your finances in check. But keep in mind that growing your KiwiSaver fund takes time and patience.

If you’d like to maximise returns, the most important step is to make sure that you’re in the right fund for your age, long-term goals and attitude to risk. As KiwiSaver advisers, we can help you explore your options in detail – now and over time.

An Adviser Disclosure Statement is available free and upon request.

Why should 20-year-olds consider Insurance?

Shai Patel

Your 20s are a decade of ‘rinse, wash and repeat’ transformation. A new job, your own car, a roof over your head, increasing everyday expenses, and maybe a young family to take care of – you may feel that your life is going from zero to 60 in the blink of an eye.

With all these changes happening at once, now might be a good time to ask yourself, “Do I need Insurance?” Here are some important things to consider.

You are worth protecting

If you own a car, you may be familiar with Car Insurance and House & Contents Insurance. But while protecting your home and vehicle obviously makes sense, there’s another important asset you should keep front and centre – and that’s yourself.

Regardless of your age, everyone’s situation is different. Having said that, let’s take a good look at some of the Insurance types relevant to your stage of life.

—Health Insurance

Value-for-money is a key element here, because the younger and healthier you are, the lower your Health Insurance premiums will be. Plus, if you take out Health Insurance in your 20s, you’d be less likely to have developed pre-existing medical conditions that might affect your insurability down the line.

—Income Protection and Trauma Insurance

Are you relying on your income to live and meet your financial commitments? Do you have people depending on you financially? You may want to consider Income Protection or Trauma Insurance. Both are designed to protect you financially if you’re sick or severely injured, but they also provide different types of cover: we can walk you through their features and help you assess which is right for you.

—Life Insurance

Thinking about dying may be uncomfortable, but a little preparation goes a long way towards providing peace of mind for yourself and the people you love.

Life Insurance can be a good idea, even at a young age, if:

  • You have debt – Do you have credit card debts, personal loans or a mortgage? Life Insurance will help you and your loved ones (parents or partner) cover outstanding costs should the unexpected happen.
  • Have people depending on you financially – Are you married or in a partnership? Do you have any young children? How would they cope with you no longer being around? Not getting to share the life you planned together is unthinkable, but ensuring that you’re prepared for the ‘worst case scenarios’ can give you the peace of mind you deserve.
  • You are young and healthy – Even if you don’t have financial dependants, the best time to get coverage could still be now. Just like Health Insurance, Insurance can be a lot cheaper when you’re young and healthy. What’s more, if you choose level-premium Insurance now, you can lock in those low rates for life: you’ll pay a little more today but your premiums won’t increase with age.

 

Why having an Insurance Adviser makes sense

We’re fans of young Kiwis being proactive about their financial life, and welcome you to take a look at what’s available. It’s good to research online, but remember, securing Insurance online can come with pitfalls. For example, it might be easy to get lost in the details and forget to disclose important information.

As your Insurance Adviser, we can help you secure and maintain the right level of the right cover. Plus, you can count on us to be in your corner at claim time, to make sure that you receive your payout as quickly as possible.

An Adviser Disclosure Statement is available free and upon request. 

Don’t set and forget – squeeze your insurance for all it’s worth

Shai Patel

Making your insurance work for you isn’t just about signing on the dotted line. It can be all too easy to ‘set-and-forget’ your insurance unless something happens and you need to claim. But if there is one thing you take out of this quick read, let it be this: make your insurances part of a regular ‘financial health check’.

Understand your policy (really understand it)

The ‘set-and-forget’ approach to insurance (which is, by the way, completely understandable), has a couple of key downsides. First, it can mean that you forget about certain benefits of your policy and potentially miss out on a valid claim. And second, without reviewing your cover on a regular basis as your life and situation change, you can unwittingly expose yourself to the risk of being under-insured or having an outdated policy.

The good news is that with us in your corner you don’t need to wade through policy wording for a refresher on the benefits your insurance offers (and what you can claim on). All you have to do is pick up the phone or send us an email and we’ll happily talk through the detail with you. And of course, we’ll remind you when it’s time to check-in on whether your insurance needs a tweak or two, which brings us to the next point…

Make the most of the review process

As you know, your insurance policy renews annually. A year may not seem like a long time, but when you sit down and talk through where you are at today, it can be amazing how much has changed. And it’s that change that we, as your adviser, need to know about so that we can assess whether your insurance is still in line with your life and needs. Think of it as an opportunity to take stock and move forward with confidence that you have the right protection in place (even if no change to your insurance is needed).

Put us to work at claim time

Perhaps an obvious one, but never hesitate to contact us if: (1) you want to know whether you can claim on your insurance, or (2) you know you can claim and need to lodge it with the insurer. We’ll help you understand what you can claim on, work through the claim documentation with you and facilitate the claim process with your insurer. As we said – put us to work at claim time; we’re in your corner.

We look forward to seeing you at your next insurance review. As always, if you have any queries in the meantime, we welcome you to get in touch.

An Adviser Disclosure Statement is available free and on request.

How much does it cost to raise a child in New Zealand?

Shai Patel

WINTER 2017

By Amy Hamilton-Chadwick, Freelance writer and registered FA

It’s often said that it takes a village to raise a child. From a financial perspective, though, you had better hope the village has a solid investment portfolio. Raising children is a costly exercise, and the more you earn, the more you’re likely to spend.

The hard costs

The hard costs are the actual day-to-day expenses incurred by each child, either directly or as part of the family’s total bills: for example, food, clothing, accommodation costs, education, and healthcare. Australian bank Suncorp found in its 2016 Cost of Kids Report:

• The 9 to 11 age range is the most expensive, followed by ages 6 to 8, then 3 to 5, 12 to 14, and 15 to 17. The under threes were the cheapest.

• The first-born wasn’t the most expensive – parents actually spent more on each child as the family expanded, although housing costs didn’t increase much, which helped to offset the higher spending.

• Food is the biggest expense when it comes to your children.

For most Kiwi families, though, the basics are only part of the story. Optional activities like sports and music lessons add up rapidly, as do additional toys, technology, and sports gear. Then there are family holidays, private schooling, and extra tuition. And do you need a bigger house?

Those discretionary decisions are why there’s a big gap between what various households spend: estimates range from about $150–$450 per child per week, depending on your income. That’s a range of $7,800–$23,400 a year or $140,000–$420,000 across 18 years – plus another $12,000–$20,000 per year if your child attends a private school! And, as many parents discover, if your child stops costing you money at the age of 18, you’re in the minority. Plenty of parents are now assisting children in their thirties into first homes.

An extremely rough estimate

Obviously, you didn’t have kids to turn a profit. You love the expensive little blighters. But what does the average Kiwi kid cost to keep for a month, in hard costs alone? Here’s a very rough estimate, based on numbers from local and Australian research:

Food  $320

Housing and utilities $215

Education (public)  $40

Activities  $60

Holidays $95

Clothing $80

Transport $75

Entertainment $70

Healthcare $60

Pocket money $35

Communication/technology $60

Extra and unexpected costs $50

That’s a total of: $1,160 per month, or $13,920 a year, or $250,560 from birth to age 18.

The ‘Stay-at-Home Parent Penalty’ 

The biggest hidden cost of parenthood is taking time out of the workforce. This can be extremely expensive over the long term, even if in the short term it can seem like it’s a money saver when you weigh up the costs of childcare, transport, clothing, and so on.

Five years out of the workforce, missing out on all the promotional opportunities and additional KiwiSaver contributions and gains that entails, can result in the loss of hundreds of thousands of dollars in income. When you go back into the workforce, you’re often earning less money than when you left, too. This penalty will have an impact on whichever parent takes time out, but some research suggests stay-at-home dads are even harder hit than stay-at-home mums.

The good news

Holy mackerel, there’s got to be an upside, right? Yes, there is. Parents actually earn more than non-parents in New Zealand, according to Statistics New Zealand. One or both working parents may benefit financially, although fathers get a bigger boost.

In other good news, a 2015 Melbourne Institute paper found that children “have a very small impact upon wealth accumulation, seemingly at odds with the large ‘costs’ implied from expenditure-based estimates.” So even if the numbers look huge, over the course of your lifetime, it’s a surprisingly small dent out of your overall wealth.

So, if you are considering having a first child, or adding to your already growing brood, it’s wise to keep the costs in mind – even if the rewards are priceless.

The editorial above reflects the views of the editorial contributor only and content may be out of date. This article is sourced from a previous JUNO issue. JUNO’s content comes from sources that it considers accurate, but we do not guarantee that the content is accurate. Charts are visually indicative only. JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions

Source

When is the best time to buy Pet Insurance

Shai Patel

You may ask yourself whether you should get pet insurance when you have a kitten or puppy, or wait a while and get it as they are older in life. Although you may think that your puppy or kitten is healthy and unstoppable, they can be susceptible to illnesses and still learning their way around this big world.

Puppy or kitten

Pet insurance for many is the last thing on the mind after bringing home a new pet. You’ve paid for the animal, initial vet costs and vaccinations, microchipping plus all their toys, bedding and food. Many people hold off on purchasing insurance as they cannot afford it immediately.

Puppies and kittens often have very weak and sensitive immune systems and as such more susceptible to illness and disease.  This can turn in to thousands of dollars in vet bills. By paying monthly instalments for pet insurance as soon as you pick up your new furry friend, you can give yourself the peace of mind knowing that they will be covered.

Injuries and illnesses to your pet can come at the worst of times, so if you decide to put aside some money and not get pet insurance, you may be hit earlier than expected and not have enough to cover the treatment bills.

Older dogs and cats

Our pets get more fragile with age and tend to find themselves sick or injured even with the best care. For most, this is the perfect time to have pet insurance, however most companies will not take on a new policy if the pet is over 8 years old – although will continue to cover the pet if the policy was registered before the 8th birthday.

If you do decide to insure your pet in their later years, they may come with pre-existing conditions that can be excluded from your insurance cover. The longer you wait for pet insurance, the higher the chance there is going to be exclusions.

When should I get pet insurance?

Accidents and injuries can happen at any time; with younger animals being prone to injuring themselves while older dogs and cats being more susceptible to illnesses. The perfect time to get pet insurance is when you can’t afford to be paying for any unexpected injury or illness. Although it may seem like an unnecessary expense to some, when you cannot afford an unexpected big expense and don’t want to compromise your pet’s health, pet insurance is the perfect option for you – therefore get it as soon as you can.

If you are keen to look at getting insurance for your beloved cat or dog, then you can either contact us on info@insurenz.co.nz or click on link and get you pet covered ASAP – 1 Cover Pet Insurance

Source

Stepped or Level Premiums? What works for you?

Shai Patel

Life insurance – it’s an important choice. It’s the kind of financial decision that requires a fair bit of thinking about what you need today, and what you might need in the future. One of the key components in the life insurance decision is short and long-term affordability. Which brings us to our topic: Stepped and Level premiums – what’s right for you?

Stepped vs Level – what’s the difference?

The main difference is pretty straight-forward. Stepped premiums (“rate-for-age”) are age-related and increase as you get older, but are usually cheaper than Level premium insurance in the short-term.

With Level premium insurance, on the other hand, you don’t have to worry about increasing premiums as they remain steady throughout the duration of the contract. Level premiums are usually higher than Stepped premiums at the start of the policy, but lower in comparison in the longer term.

So, in a nutshell, with Stepped premium insurance you tend to save in the short term. With Level premium insurance, you tend to save in the long term.

You can also choose a ‘mix’ of stepped and level

There’s nothing like a real-life example to show the benefit of choosing the right premium type.

Around eight years ago, I helped one of my clients (a couple) set up a Life Insurance policy. After a thorough conversation, we decided to mix stepped and level premiums. The clients put a certain amount on Level, namely the amount that they felt they would like upon death. The remainder was stepped (therefore, set to increase with age).

This was a smart move. As stepped premiums increased and debt reduced, my clients could in fact gradually reduce their stepped cover (without touching the levelled amount, obviously). And in the meantime, they could also benefit from the short-term savings made thanks to cheaper stepped premiums.

As a result, as prices have gone up on the Insurances over the years, the stepped cover is nearly the same prices as level and so the savings are already seen.

What works best for you?

How can you choose what’s right for you? The choice between Stepped and Level premium insurance mainly depends on whether you think the level of cover you need may change, and in what period of time.

If you think you need a higher level of cover in the short to medium term, and a lesser level of cover down the track, then Stepped premium insurance could be an option for you. If, on the other hand, you think the level of cover you need won’t reduce, then locking in your premiums now and saving down the track with Level premium insurance could be more appropriate for your needs.

No crystal ball but good advice available

Please don’t hesitate to contact us: it’s our job to help you find the right fit for both the short and the long turn.

Of course, none of us know exactly what we’ll need in five or ten years. But sitting down with an adviser and talking through where you are at now, where you think you’ll be in the future and how the options stack up to your needs, is a good idea. Having some comparisons to consider is often the best first step in making an appropriate choice for your personal circumstances.

And with that in mind, we’re here to help and welcome you to get in touch if you’d like to compare Stepped and Level premiums and how they apply to your life insurance needs.

An Adviser Disclosure Statement is available free and upon request.

Know your KiwiSaver fees

Shai Patel

Do you know how much you’re paying in KiwiSaver fees?

Fees are just one of the key elements to consider when looking for the right investment fund, of course – performance is also crucial and should be taken into consideration. Having said that, when you’re investing to earn solid returns and save for retirement, it’s important to make every dollar count.

Here are some key things to consider if you want to minimise your KiwiSaver fees and get the best returns possible.

 

Why fees are so important

All KiwiSaver providers will charge you fees for investment, management and administration costs. The amount can also vary greatly across different providers and fund types.

To give you a practical example, when analysing balanced funds, Canstar found a difference of $123 between the most and the least expensive fees. It might not seem a lot in the short term, but different fees can have an impact on your long-term returns, your saving strategy and – most importantly – your goals.

Types of fees & disclosure rules

Usually, the annual cost of a KiwiSaver fund is a combination of separate fees. These include:

  • Annual member fee
  • Management fee
  • Administration fee
  • Trustee fee
  • Expense fee.

So, how can you know for sure what fees are involved and how much you’re paying for them? All funds are required to fully disclose this information in their periodic disclosure statement, which can be found on your KiwiSaver scheme website. And of course, if you need help understanding the ins and outs of your fund, we’re here to help.

We can help with comparisons

When it comes to planning and working towards your retirement goals, ensuring that you’re getting the right value for your money (and earning a healthy compound interest) is crucial. That’s why taking the time to choose, review and compare KiwiSaver funds makes sense.

Obviously, a fund cannot be judged on fees alone, as the highest-fee fund can also be the one achieving the highest returns. But as you can imagine, that is not always the case. If you’d like to have a thorough understanding of what’s available out there, and how it relates to your needs, always feel free to contact us. We have the tools to help you make an informed decision about your investments.

For more helpful information, don’t miss our recent guide “Will your KiwiSaver meet your retirement needs?“.

An Adviser Disclosure Statement is available free and upon request.

Health insurance: Value for money counts

Shai Patel

Obviously our health is not something we should penny-pinch on. But having said that, value for money definitely counts when you’re looking for a new health insurance policy or reviewing an existing one.

Here are some helpful tips on how to make the most from the money you spend on health insurance.

The value comparison

There is a plethora of choice in the health insurance market – a large range of benefits and pricing. It can be tricky to compare apples-with-apples, and more importantly, how policies, benefits and pricing stack up against what you personally want your insurance to cover. As your insurance adviser, we have access to a range of providers and products in the market and can help you shortlist a range of suitable products, based on your specific requirements and budget needs.

Getting the excess right

Selecting the highest excess you can afford to pay can be – depending on your circumstances – a good way to reduce your premiums. But if you choose this approach, it’s important to remember that having a large excess could mean that you miss out on being reimbursed for lower-cost procedures – in other words, the cost of accessing your insurance (your excess), may outweigh the cost of the treatment.

Focus on the extraordinary as opposed to general care

One option is to take out ‘hospital-only’ or ‘hospital and specialist’ cover rather than comprehensive coverage for general medical costs (e.g. visits to the doctor). It all depends on how you want your cover to work – but this approach can mean that you can assign more budget to higher-cost risks (the often unforeseen medical events that life can throw our way), instead of spreading it across health services that the household budget can stretch to (again, for example, a visit to the doctor).

Know your no-claims-bonus threshold

Some insurers reward their customers by offering a low-claim bonus. To be eligible, customers need to remain below a specific threshold over a certain period of time. Needless to say, this certainly does not mean that you should avoid filing a claim when you need to. But it is good to know what your insurer’s no-claims bonus threshold is (if they offer it) so that you can weigh up the benefit of claiming against being eligible for a bonus.

Don’t forget direct debit

Setting up a direct debit is another easy way to save a few dollars. Don’t expect a huge sum (we’re talking about shaving 2.5 percent off your premiums), but as they say, even small amounts over time can amount to significant savings.

Check the extras

As optional extras usually increase the overall cost of health insurance premiums, it’s important to check that you’re not adding unnecessary coverage to the mix. Once again, we can work with you to help identify what you need and remove any unnecessary add-ons.

If you would like to learn more or would like to review your policy, we’re here and happy to help.

An Adviser Disclosure Statement is available free and on request

Making your retirement planning work – at 55 and over

Shai Patel

Successful retirement planning is a key part of being prepared for life after work. The comforting news is, it’s never too late to take action. Of course, the later you start in life, the more challenging it is to support the lifestyle that you want.

If you’re over 55, and belong to KiwiSaver or have your own business, there are ways to give your nest egg a helping hand – and get the most out of your savings after retirement.

How close are you to retiring?

Effectively managing your KiwiSaver is always important, regardless of your age. But depending on your risk appetite, and how close you are to your last day of work, your decisions in terms of risks and returns can vary.

Bear in mind that the closer you are, the lesser time you have to weather the ups and downs of the market. If you’re set to access your KiwiSaver money within the next 10 years, then lower-risk funds may be your best option – unless you’re willing to take a higher financial risk (and potentially higher losses) in the hope of a bigger and quicker return.

Regular income or lump sum?

According to a recent global report, New Zealand’s pension system is among the world’s top 10. But there’s room for improvement – for example, by increasing the focus on getting an income from retirement savings rather than a lump sum.

This is certainly a valid point. Managing your nest egg so that it lasts can be challenging, and definitely takes advanced planning. If securing a regular income works best for you and your long-term needs, keep in mind that KiwiSaver can help you. Although funds can be accessed after the age of 65, there’s no obligation to withdraw all of your savings in one go. You can stay in KiwiSaver for as long as you like, and draw your funds gradually over time.

And if you’re a business owner…

Your business is one of your biggest assets, and something you’ve worked hard to build. Have you thought about what will happen to it when you retire? Would you close it, sell it or pass it on to your family? Whatever the future you’re envisioning, it may be time to draft a strategic business plan and discuss it with all parties involved. Once again, you might want to retain some ownership and continue to receive part of the earnings, or you may go the way of selling it entirely and take home a lump sum.

Get some help from the experts

As KiwiSaver experts, we can help you plan for your retirement and work out with you how your savings will fund it. Don’t forget that having an expert in your corner can make all the difference, whatever the life stage you’re at.

And on this note, if you (or anyone you know) are keen to make KiwiSaver work for your needs, don’t hesitate to contact us.

Please note: This article offers generic advice rather than personalised advice and should not be relied upon as personalised advice.

An Adviser Disclosure Statement is available free and upon request.