Monday, February 27, 2017

How to Avoid Your Insurance Claims Being Denied.

Sometimes, people can get the image of insurance companies as money hungry corporate folk looking for any possible reason to deny all possible claims. Fortunately though, in the risk insurance market in New Zealand, that image doesn't hold true. The major reputable insurance providers that we deal with have a great record of paying out claims that are owed, provided they meet the specific conditions of the policy (which is why it's always a good idea to read the policy wording and know exactly what's covered).

In general, there are only a few reasons why your insurance claim could get denied, and as long as you avoid them, you can strongly depend on your insurance paying out when you need it during your difficult times.

1. Non-Disclosure: If you have a personal risk insurance policy and suffer injury or illness due to a condition you had prior to taking out your policy, and you failed to disclose this on your original applications, the insurance provider could reduce your claim or deny it entirely. We take considerable time with our clients to go through these forms and make sure every base is covered, but if you are going it alone, here are some things to keep in mind:

  • Declare everything, no matter how small or minute you may think it is. If the condition isn't deemed to be serious by the insurers, your policy won't be affected in any way by declaring these things.
  • Consult with your personal doctor or specialist first to remember any health issues you may have forgotten about.
  • It is never a good idea to lie about current health status (or not being a smoker) to save money on premiums. The insurance company will find out upon claims (they are generally thorough) and will reduce or deny your claim because of it.
  • You do not have to disclose conditions you develop after the policy is taken out and they will not affect the premiums you pay or any claims you take out. This is a good reason for you to consider taking out insurance when you are younger and healthier.
Proper and full disclosure may be the most important thing when taking out a policy.

2. Premiums Haven't Been Paid: An insurance policy is a contract between you and the insurer, which states that they will pay agreed upon amounts if its conditions are met. One of those conditions is the prompt and up to date payment of the agreed upon premium (the cost of the insurance policy). If the premiums haven't been paid up to date before the claim is formally requested, the insurance company may deny them or ask for payment before the claim is processed. Thus, its important not to get too far behind on your insurance payments as this is generally one of the only reasons claims get denied.

3. Conditions Have Not Been Met: If the specific condition or occurrence you're trying to claim for is not specifically covered under your policy, the claim will be denied. Sometimes a specific medical condition for instance can range in severity, and if the severity of your condition doesn't meet that specified in the policy, it won't qualify for a claim. The good news is, all of these details will always be specifically and thoroughly outlined in your policy wordings, so reading it thoroughly before, during and after taking out your policy is always highly recommended by our team.

In our more than two decades in the insurance industry we can assure you that insurance companies aren't looking to deny your claims. In return, their expectations of you are that you are honest, truthful and complete in your disclosures and maintain the agreed upon payments for the policy. If you have done so, you can rest assured that you will have very little to worry about when it comes time to make a claim.

Wednesday, February 15, 2017

NZ Market and Interest Rates Update and Analysis

It's an age old question: What are interest rates going to do? The answer to this question influences decisions for investors and borrowers alike, mostly around the length of time to commit to in order to maximise income or minimise borrowing costs. While interest rates in the United States have started to move upwards, what is in store for New Zealand?

New Zealand's Official Cash Rate (OCR) currently sits at an historic low as our Reserve Bank has struggled to get inflation up into its 1-3% target range. However, the low interest rates have helped the local economy pick up strongly. This has been aided by significant migration into New Zealand. Yet the increase in migration, whilst giving a boost to the economy, has also supplied additional workers, helping to limit wage increases. Additionally, the resilient New Zealand dollar is helping to keep import prices from rising too fast. The result is that the Reserve Bank will want to ensure that inflation is not only seen in action but also likely to persist before contemplating raising interest rates. For these reasons, while a turn in interest rates is in order, the OCR is unlikely to actually begin rising until later in 2017 at the earliest, with some economists even suggesting not until 2019. When the OCR finally does begin to rise, it will be good news for savers and the increasing number of New Zealanders enjoying their retirement years. In the meantime, at least New Zealand's rates remain well above those in most other developed countries around the world.

Market Update

  • The NZ central bank left rates on hold at 1.75 percent and while it indicated higher interest rates were possible in the future it's not planning to move any time soon, saying monetary policy will remain accomodative for a "considerable period."
  • Investment funds have had quiet start to the year, seeming to still be on holiday with returns relatively flat during January. Funds' New Zealand share investments rose (and are up 20% over the past year), although the New Zealand Dollar was also up 5% which took the gloss off gains on overseas shares.
  • Despite the new US President providing an ongoing series of news fodder, generally economic confidence around the world is starting 2017 on a high note. This is an encouraging sign in the year ahead for company earnings, one of the key drivers of shareholder returns.

Jonathan Parsons M.Mgt B.A(hons) Dip Bus (fin.plng)
09 306 7259 - 027 201 3470

Tuesday, February 7, 2017

Smokers and Insurance: How much you could save by quitting.

Statistics estimate that 15% of adult New Zealanders smoke, or a total amount of around 550,000 people. These smokers in New Zealand have it tough in so many ways. Not only are they mired in an unhealthy and destructive habit, every year this habit takes more and more out of them financially. Since 2010, because of new tax laws passed in parliament, the price of cigarettes and tobacco has risen dramatically.

A pack of 20 cigarettes has risen from around $13 to between $22-27 in 2017 depending on the brand of choice. With 10% tax increases set in law at least until 2020, smokers can expect that they will soon be paying upwards of $30 per pack or $1.50 for each cigarette. A pack a day smoker will be out $200 per week, a cost likely higher than all their groceries for the week combined.

In 2017, each of these set their owner back over $1 a piece.

Unfortunately, that's not all a cigarette habit can cost. If you're a smoker and you have personal risk insurance in the form of life, trauma, TPD, income protection or health insurance, you're paying a lot more in premiums than non-smokers are. This is because as a smoker, you are more likely to develop serious health conditions and thus, you pose a much higher risk to the insurer. How much more will a smoker pay? In some cases it can be up to double the amount of a non smoker of the same age.

The good news is, that if a smoker manages to quit, their premiums can be revised and changed down to a non smokers level if the smoker manages to maintain it for a significant period of time. For instance, if you quit smoking 12 months ago and are paying smoker premiums on your insurance, you will be eligible to apply for changes and have your costs significantly reduced. A pack a day smoker who manages to quit could easily save between $12,000-$15,000 a year through not having to pay for smokes and the savings on their insurance. That is enough for a significant vacation, a brand new car or many many shopping sprees. Even those who only smoke a pack or two a week could save around $5000 a year by cutting it out.

With the cost of the habit now sure to increase further in the years to come, now could be the time to dial it back or endeavour to quit entirely. Your wallet would definitely thank you for it.