Income Protection

Income Protection or Trauma Insurance: which is for you?

Shai Patel

At first glance, Income Protection and Trauma Insurance may look very similar. After all, both are designed to protect you financially if you’re sick or injured. But if you get past that first impression, you will realise that they provide very different types of cover.

So, which works best for you? To answer this question, let’s dig deeper into the differences.

 

What’s Income Protection Insurance?

Income Protection offers you a monthly replacement income if you become disabled or severely ill. The amount of these monthly payments is tied to what you earn, and can only be collected when you’re not able to work.

Plus, you can tailor this type of cover to your needs by selecting the right ‘benefit amount’, ‘wait period’ and ‘benefit period’.

Benefit amount

The Income Protection payments usually amount to a maximum of 75% of your original earnings. But if you have lower day-to-day expenses, or simply want to reduce the premium, you can opt for a lower percentage.

Wait period

Another way to bring down costs is to choose a longer ‘wait period’ (if appropriate to your circumstances). This is the amount of time that you can afford to wait before you receive your first monthly payment – and of course, the longer the ‘wait period’ you choose, the lower the premium will be.

The choice strictly depends on your situation: do you have a ‘rainy day’ fund? How long could you afford to wait, without earning an income?

Benefit period

You can specify a ‘benefit period’ in your policy, which is the maximum period of time that your insurance provider will pay you while on claim. While some people choose to only receive Income Protection payments for two to five years, you can also opt to receive them until you reach retirement age at 65.

 

What’s Trauma Insurance?

With Trauma Insurance, there’s no waiting period involved. This type of cover is paid upon diagnosis or severe critical condition, and offers a lump sum regardless of whether or not you’re unable to work. For example, it can help you take care of expenses that health insurance doesn’t cover (rehabilitation, carers, extra treatments, etc.).

About the meaning of ‘critical condition’

Usually they represent serious, life-threatening illnesses such as stroke, heart attack and malignant cancer, but the list of covered conditions can vary significantly between different policies. That’s why it’s so important to understand what your policy entails, and which conditions are covered.

Stand-alone or ‘Accelerated’

You can either select a Stand-alone Trauma Cover or attach it to your Life Insurance (‘Accelerated Trauma Cover’). While this is usually cheaper than the Stand-Alone Trauma Cover, keep in mind that your Trauma Insurance claim will reduce the payout of your Life Insurance.

 

If you’d like to discuss Insurance that can help you when you can’t help yourself, feel free to contact us. Getting the right cover is all about understanding the finer details, and the right Insurance adviser is here to make sure that you get the right policy.

An Adviser Disclosure Statement is available free and upon 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

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Insurance company refuses to cover Auckland mum with rare illness

Shai Patel

 

Here is a great article which points out why getting good financial advice is important, so that you have the right cover for what you require it for. We listen to find out what you want the cover for, before coming back to you with recommendations.

Trauma insurance is a great cover to have, (We have had some amazing claims stories) but it is specific to a list of conditions (these vary dramatically depending on whether it is a bank product or one through Insure NZ). We will also look at other options that would have covered Selina in the situation below. We can mix and match cover, so that it will cover as much as we can for your particular budget.

Three months ago Selina Linton fell out of bed, unable to move her legs. She barely remembers the following weeks spent intensive care; doctors can’t say exactly when, or to what extent, she will recover.

The Auckland woman was struck by Guillain-Barre Syndrome — a mysterious, debilitating illness that attacks the nervous system. The 54-year-old dental assistant remains in a rehab centre, in nappies, unable to walk.

Her husband Nathan Linton, 53, said he was shattered to learn the trauma insurance policy they had been putting money into for over two decades didn’t cover Guillain-Barre. It wouldn’t pay out for what the family deemed an “incredibly traumatic” experience.

The Lintons’ discovery is not unusual. Trauma insurance, also known as crisis or critical illness insurance, is a broad term for a highly specific type of coverage. It pays a lump sum to be used any way the insured chooses.

Selina’s medical bills were covered by the state, so Nathan said the money would have gone into modifying their Titirangi home for the wheelchair his wife was likely to return with. He said the family were also “getting kicked” through being one income down.

Nathan said he hoped others might temper their expectations of trauma coverage after his family’s experience: “we’d have done better putting the money in a jar by the bed”, he said. Ideally, he wanted Guillain-Barre put on insurance companies’ trauma tick list.

A spokesman for AMP, the Lintons’ insurance provider for over two decades, said trauma policies didn’t cover Guillain–Barré Syndrome for several reasons, including because only 40 to 80 New Zealanders got it each year.

“Insurers can’t cover every eventuality – if they did premiums would go up and cover would not be accessible or affordable,” he said.

Guillain-Barre sufferers who permanently lose their ability to “perform key tasks independently” could, however, get a pay out through trauma insurance, he said. Selina was not eligible as doctors believed she would eventually recover.

Karen Stevens of the Insurance and Financial Services Ombudsman (IFSO) said she had many clients who, like the Lintons, felt misled by their trauma policy.

“Trauma in everyday language means something unexpected that happens to you and plays havoc with your life — but if it’s not specifically mentioned in your policy, it won’t be covered,” she said.

“We recently had a woman come in who had suffered fairly horrific injuries from giving birth to a baby, for example, which left her incapacitated. She said it was the most traumatic thing that could have happened to her, but since birth wasn’t mentioned in her policy there was nothing we could do.”

Stevens said disgruntled heart attack victims approached the IFSO “constantly”. While trauma policies typically include heart attacks, they only pay out if certain events play out.

Since being in hospital Selina has had pneumonia, a tracheotomy — doctors cut a hole in her windpipe to get air to her lungs — a flooded lung, and excruciating nerve pain. Her husband said her “good brain inside a very sick body” — which until recently could not speak — and the ever-fuzzy prognosis of Guillain-Barre had taken psychological tolls too.

She could barely keep her eyelids up at 4 o’clock in the afternoon last Tuesday, in a wheelchair at her Point Chevalier rehabilitation clinic. She held her husband and their 22-year-old daughter Lucy’s hands, and cried.

“Now I should be finishing work for the day and going home to cook dinner with my family,” she said. She missed the Titirangi trees, her dog, and “catching up with the girls”.

Nathan promised to get their wheelchair-unfriendly house ready for her “somehow”, to hasten her homecoming.

“We’ll suck it up,” he said. “But we thought we were responsible, taking out that insurance policy so that if something like this happened, we’d be able to look after each other comfortably.”

WHAT IS GUILLAIN-BARRE? 

– It is a collection of symptoms, rather than a single disease.

– They include rapidly progressive weakness, sometimes resulting in complete paralysis.

– Recovery typically takes three to six months, though two-thirds never fully recover and it can be fatal.

– It frequently follows another health problem such as food poisoning, flu, childbirth or surgery.

– Two cases were triggered by the campylobacter outbreak from contaminated drinking water in Hawke’s Bay last year.

If you have any concerns about your insurance cover and wish to have a free no obligation chat, please call on 09 551 3500 or click here

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MISTAKES TO AVOID WHEN BUYING INSURANCE

Shai Patel

Buying insurance can be confusing, but when the unexpected happens – a death, floods, car accident, unable to work or illness – it’s a relief to know that some of those financial losses will be covered. But how do you know how much coverage you need? And what questions should you ask before buying a policy?

Many consumers aren’t sure. Insurance coverage is far from one size fits all, so here’s a look at mistakes some consumers make when buying insurance.

Assuming insurance is unaffordable.

A large percentage of the population has no health or life insurance. Often that’s because people feel they can’t afford it. This is not correct and you will be surprised at what you are able to get.

The average consumer thinks life insurance is three times more expensive than it actually is. And often they do not research the actual costs.

When buying insurance, ask about potential discounts. These may be offered if you place all your insurance with one company or you may be able to get discount on medical insurance if you add some other cover with it.

Relying on assumptions or outdated figures.

It is surprising how many people we talk with who realise that they may either be underinsured or in some cases over insured because they have not had their insurances reviewed for a while.

As things change so quickly in the insurance industry, it is worthwhile reviewing your insurance on a regular basis because you need to make sure that it meets your needs at the time you need at the most.

Click here to see video on why to review you insurances

Shopping on price alone.

Comparing insurance policies can be confusing, but resist the urge to simply choose the policy with the lowest premium. Consider the company’s reputation and the coverage you get for the premium you pay.

What we do for our clients is make sure the company that we decide to choose, has good claims paying history, at application stage they have the company that will offer the best terms and policy wordings that at the time of claim have more chance of paying.

Glossing over the details.

Insurance companies pay a claim when you meet the policy wordings of the insurance cover. It is always wise to read and understand these wordings, so you are aware of may or may not be covered. We specialise in this, so you do not need to and available to answer questions if anything is unclear.

What I see when I meet with clients is that they have insurance cover, but due to the complex wordings of the policy document and not having a degree in law to understand these, that people find it hard to understand exactly what they covered for. I actually have a law degree from the UK and therefore am able to decipher these wordings for you and help you understand them in plain English.

Setting your excess too low.

Setting a low excess typically means higher premiums. Insurance is designed to protect against losses you could not cover yourself, so if you can afford to pay the first $500 or $1,000 yourself, you may not need a lower excess. Consider your own financial situation. How much of the risk are you willing to insure yourself?

Because insurance can be so complicated, we recommend a regular review of all your policies to ensure you are adequately covered. Now would be a good time to call and book a time for a review so you don’t find yourself out of pocket should disaster strike.

Feel free to contact us for a free no obligation chat – Insure NZ – 09 551 3500 or click here

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Diabetes – How much do you know?

Shai Patel

Diabetes is a disease where your body cannot control its blood sugar levels properly – either because your body doesn’t make enough (or any) insulin, or because your cells have become resistant to insulin.

Insulin is a chemical produced in the pancreas. It helps your body process sugars.

  • If blood sugar levels aren’t kept under control, diabetes can be life-threatening.
  • Diabetes can lead to other health conditions, including kidney failure, eye disease, foot ulceration and a higher risk of heart disease.
  • Keeping your blood sugar at a safe level means you’re less likely to have other health problems.

There’s no cure for diabetes, but there are things you can do to stay well. Support from your friends, whānau and health care providers can help

Heart and diabetes checks

Diabetes is our largest and fastest growing health issue we face in New Zealand. Diabetes is closely linked with heart disease (also known as cardiovascular disease or CVD), and together they are responsible for the deaths of more New Zealanders each year than cigarettes are. Many of these deaths are preventable.

The More Heart and Diabetes Checks Health Target has been established to help save these lives – aiming to have regular heart and diabetes checks for at least 90 percent of those at risk of developing these conditions. Find out more about heart and diabetes checks.

How common is diabetes?

There are over 240,000 people in New Zealand who have been diagnosed with diabetes (mostly type 2). It is thought there are another 100,000 people who have it but don’t know.

  • Diabetes is most common amongMāori and Pacific Islanders. They’re three times as likely to get it as other New Zealanders.
  • South Asian people are also more likely to develop diabetes.
  • The number of people with both types of diabetes is rising – especially obesity-related type 2 diabetes.

Type 1 diabetes

Type 1 diabetes is when your body has stopped producing insulin. People with type 1 diabetes need to inject insulin to live.

  • Type 1 diabetes is usually diagnosed in children.
  • Type 1 diabetes is less common than type 2 diabetes.

Type 2 diabetes

Type 2 diabetes is when your cells have become insulin resistant or your body doesn’t produce enough insulin to keep you healthy.

  • Type 2 diabetes usually develops in adults but it is becoming more common in children.
  • Type 2 diabetes is the only type of diabetes linked with obesity.

Diabetes in pregnancy

Pregnant women can also develop diabetes. This is known as gestational diabetes (or ‘diabetes in pregnancy’). It usually goes away when the baby is born.

But the problem is more widespread than that, and it appears to be worsening.

In fact, advocacy group the International Diabetes Federation has estimated that by 2040 the number of adults with diabetes globally will rise about 55 per cent to reach 642 million.

And there’s no room for complacency, with the federation stating that the condition kills one person worldwide every six seconds.

However, diabetes can often be effectively managed, even prevented.

While access to quality medical care plays a large role, so too does public awareness of diabetes, and to test your knowledge, we’ve developed a quiz.

Answer the 10 questions below as true or false, then check the answers to see how you fared.

Afterwards, you may also like to complete or update your Wellness Assessment to learn about your diabetes risk and potential ways of addressing it.

For more information and individual advice, consult an appropriate health professional.

 

What’s your diabetes knowledge?

Indicate whether the following statements are true or false.

  1. Glucose is found in blood only.
  2. Insulin is a hormone normally released into the blood after eating.
  3. Type 1 diabetes is a lifestyle disease.
  4. In type 2 diabetes, the body may stop responding to insulin properly.
  5. Being overweight does not increase the risk of type 2 diabetes.
  6. You can develop type 2 diabetes without experiencing obvious symptoms.
  7. Type 2 diabetes increases the risk of cardiovascular disease.
  8. People with diabetes should avoid sugary food and drink.
  9. Type 2 diabetes always requires medication.
  10. Gestational diabetes goes away after pregnancy.

Click Here For Answers

Source 1, Source 2

Disability insurance myths to stop believing

Shai Patel

 

 

 

Disability insurance can be a life saver. Here’s how it works

Disability insurance can be a tricky topic. And if you’re not reading the fine print, you could be relying on inaccurate myths when making the key decision of deciding how much you’ll need. We’ve picked some myths that we think are most prevalent and need the most clarity.

  1. MYTH: I do not need disability insurance; the chances of something happening to me are very low.

 FACT: The chances of getting disabled are much higher than chances of getting into a car accident or having your house burned down. In NZ, in 2013, 24% of the population was identified as being disabled (1.1 million). The biggest cause of impairment was disease or illness (42%). I am sure you have home insurance. What is the justification for not having disability insurance?

  1. MYTH: My insurance at work covers me should something happen to me.

FACT: It depends on what protection is in place. If your employer has a group scheme in place, you need to make sure that the cover has either Income Protection cover or Total & Permanent Disability at the least. Some companies may offer Life Cover only or in most cases or in most cases, the only cover will be Medical Insurance.

  1. MYTH: ACC will pay if I am fully disabled.

FACT: it is important to remember that ACC will only pay if it is related to accident. If you are fully disabled due to an illness, you will not get any compensation from ACC. I am always surprised at how many people think that ACC will pay them due to an illness!

  1. MYTH: The more disability policies you have the better—should something happen to you because you will be able to cash out all of them.

FACT: Your disability policies are linked to your Income, Mortgage or Household Expenses. This means that the value you can get from all of them is capped and will not provide you with a luxury existence. Usually, you will be covered for a certain percentage of your income, such as 55% to 75% or whatever your mortgage repayment may be.

  1. MYTH: If I have a group disability insurance policy at work, I do not need an individual disability policy.

FACT: Although it is a great protection mechanism, you need to understand its exact conditions, what the coverage provides and the percent of your salary it covers. Nevertheless, you need to remember that if you lose or change your job, you will not be protected (some companies do allow the policy to be taken with them, but usually pricing is more expensive and there may be rules that need to meet before this is allowed) —that’s where individual disability insurance kicks in. It is also important to remember that usually personal income protection policies are better than those offered by the company.

  1. MYTH: Disability insurance works similarly to life insurance—once you are disabled, you will get a lump sum.

FACT: Disability insurance is different from life insurance. It does not pay a one-time lump sum but offers regular payments while you are disabled, substituting your income or a part of it depending on the policy you have. The only disability insurance that does pay a lump sum is Total and Permanent Disability (TPD) – this in New Zealand is classed as disability insurance but works very differently to Income/Mortgage protection.

  1. MYTH: If I become disabled, my disability payments start immediately.

FACT: Many disability contracts have a stand down period which you can choose, these can vary from 2 weeks to 104 weeks. The longer the wait period the cheaper the premium, but usually when we look at personal cover will look at how long you could survive financially before needing income.

As you can see, there are many different types of disability products that could be suitable for you and also many variations. What we would recommend is that you get advice from a specialist like us at insure New Zealand. We are happy to have a free no obligation discussion.

Please feel free to contact us on 09 551 3500 or email info@Insurenz.co.nz.

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Do your insurance premiums increase each year? – Would you like to know how to stop this?

Shai Patel

Are you like most people – you receive an insurance renewal each year and you have a look and then file it away. You get older and then suddenly notice that the premiums are getting too expensive!!!

Unfortunately, as you get to an age where you could possibly need the insurances, the premiums become unaffordable!! There are ways to control this and in the long run you will pay a lot less premium.

Some companies even offer level term premiums not just for life insurance, but also trauma and income protection. You can also choose the period of time you wish to have level premiums (5 years to age 100) – this can be adapted to your budget and time frame you require the insurances.

Here is an example, of a Female aged 40 non-smoker – with $500,000 life cover.

Projection 1 = premiums increasing with age
Projection 2 = level premiums to age 70
Projection 3 = level premiums to aged 80

level-cover-comparison

As you can see from above, you pay just over $58 more to start, but when we compare the chart above between increasing with age (projection 1) and the level premium cover to age 80 (projection 3):

  • At age 52 – you are paying $96.25 per month with age increase premiums compared to $92.31
  • at age 61 – total cumulatively are breaking even – so anything after this age is a savings
  • At age 80, you would have saved over $235,000 in total premiums.

Could you afford $430 per month at age 66 for the cover?

So if you are looking at insurances that are affordable when you need it most, then this is an option that you should be looking at. We have helped clients to have a mixture of level premiums and premiums increasing with age to meet their particular needs.

Please give us a call on 09 551 3500 or email admin@insurenz.co.nz.

Why review your insurance policies – How we can help!

Shai Patel

It is good idea to review with your insurances, if you have not seen your adviser for a while or do not have one give us a call 09 551 3500 or 0280 467873.

As our business name suggests, our team services New Zealand wide.

We can also arrange and review certain insurances for Kiwis living abroad.

Today 8 women will be diagnosed with breast cancer

Shai Patel

That is 8 women EVERY SINGLE DAY!!!

This year 600+ will most likely die, yet 30% of eligible women aren’t enrolled in free screening

And sadly 60% of young women don’t know the signs beyond a lump.

Breast Cancer Facts

  • Around 3,000 New Zealand women and 20 men are diagnosed every year – eight women every single day
  • The risk of breast cancer increases as women age. Around 75% of all cases occur in women over 50 years.
  • More than 600 New Zealand women die from breast cancer each year. Mortality rates have dropped by 27% since 1994 – a function of greater breast health awareness, the introduction of the national screening programme for women 44-69 years and more cancers being found earlier enabling successful treatment.
  • Regular mammograms find cancer early and save lives. The 10 year survival rate is 92% if a breast cancer is found through a mammogram compared to 75% if the cancer is detected by chance/self examination because the cancer is generally more advanced when a symptom appears. (source: NZ Breast Cancer Patient Registers).
  • The national screening rate is below 70% of women aged 50-69.

Breast Cancer Facts

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Kiwis Insure Houses over Income

Admin

Kiwis are more likely to insure their house than their income yet most people earn more in a lifetime than their house will ever be worth.

The Financial Services Council, a group representing the major banks and insurers, says six out of ten people have house insurance but just two to three out of ten have income protection.

The council is sponsoring a forum being held today called “Mind the Gap” to point out the risks people are taking by not insuring their biggest asset – their income.

It claims 54,800 families a year face their main income earner being off work for three months or more due to sickness and that many Kiwis do not have the financial backing to cope without that income.

Research commissioned by the council found 47 per cent of people aged 18 to 64 could not survive financially for more than a month after using up sick pay and annual leave.

There was also a significant shortfall in what people needed to survive on and what benefits were available.

Kiwis insure houses over income - www.insurenz.co.nz

An average family needed $683 per week to make up for a main income earner not being able to bring in money because of sickness.

But for a family with dependent children the maximum benefit was $340 per week for a job seeker allowance (previously known as the sickness benefit).

More than half of those questioned (51 per cent) did not know that if the main earners’ partner received $30,000 or more a year they might receive only part or none of the benefit.

Income protection insurance for a family of four with a combined income of $100,000 costs about $25 a week. This includes a month’s standown but if this was extended out the premium could be as low as $12 a week.

Peter Neilson, chief executive of the Financial Services Council, said its research showed people underestimated the value of their income and the chances of being off sick for a long time.

When asked what their biggest asset was 45 per cent said it was their home.

Yet a salary of $50,000 or more was worth $2 million over a 40 year working life, he said.

Of those surveyed 60 per cent thought they had the same or greater likelihood of being off work long-term following an accident rather than after sickness.

But working age Kiwis were 1.8 times more likely to be off work for six months or more from sickness than an accident, according to the council.

Over the last five years only one in eight of the households struck with long term illness had income protection insurance in place when it happened.

Neilson said the income gap following sickness needed filling and income protection insurance was one of the means of doing so.

The forum will also feature speakers from the Cancer Society, Stroke and Heart Foundations as well as people who have lost their incomes due to ill health.

Figures on the long-term sickness income gap.

Download PDF stats here.

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