Top 7 Insurance Myths Exposed: Common Misconceptions About Insurance Coverage in New Zealand

Insurance is a crucial component of financial planning, yet there are many myths and misconceptions surrounding it - myths that the Spratt Financial team have encountered countless times over our 30 years in operation. In this article, we aim to debunk some of the most common myths about risk insurance coverage (life, health, income protection, mortgage coverage, permanent disability etc) for Kiwis.

• Myth 1: Insurance is Only for the Elderly or Unhealthy

  • Reality: Insurance is for everyone, regardless of age or health status. From our 30 years of claims experience - accidents and illnesses do not discriminate by age and can happen to anyone at any time, sometimes with no warning signs whatsoever. Having tailored insurance coverage to the risks you actually face provides a crucial safety net for individuals and their families in times of need.

• Myth 2: Insurance is Too Expensive

  • Reality: While insurance premiums may seem costly at first glance, the financial consequences of not having insurance can be far greater. Insurance premiums are based on various factors, including age, health, occupation, and coverage amount, and there are often options available to tailor aspects of your cover to fit within most people's budget. You have nothing to lose by seeing what an adviser might be able to help you put together!

• Myth 3: I Don't Need Insurance Because I Have Savings

  • Reality: While savings are no doubt important, they may not always be sufficient to cover unexpected expenses resulting from accidents, illnesses, or other unforeseen events. While some believe that illness or accident is likely to result in either a quick recovery or be fatal, the reality is in most instances it results in a protracted disablement process. Over a potentially long term period of recovery where you are unable to continue earning a living - insurance can provide a means to protect savings and assets from being depleted in times of crisis.

• Myth 4: Insurance Doesn't Pay Out When You Need It

  • Reality: Insurance companies have a legal obligation to honor valid claims made by policyholders. And if you're with a specialist adviser such as us, we have a 99% successful claims record over our decades of operation in the NZ marketplace. As long as the policyholder has met the terms and conditions outlined in the policy, such as paying premiums on time and providing accurate information, legitimate claims are typically processed and paid out promptly.

• Myth 5: I'm Covered by ACC, So I Don't Need Additional Insurance

  • Reality: While ACC (Accident Compensation Corporation) provides coverage for accidents and injuries sustained in New Zealand, it does not cover all types of disabilities or illnesses. Additionally, ACC benefits may not be sufficient to replace lost income or cover ongoing expenses.

• Myth 6: I Don't Need Insurance Because I'm Young and Healthy

  • Reality: While youth and good health may reduce the risk of certain health issues, accidents and unforeseen events can still occur at any age. We've seen it happen time and time again. Securing insurance coverage while young and healthy can also result in lower premiums and fewer exclusions for pre-existing conditions. One of our staff was lucky enough to secure health insurance for himself at the age of 18 when he was young and healthy. A mere two years afterward, he was diagnosed with serious Crohn's Disease. Having the cover has over the forthcoming ten years saved him close to $60,000 in surgical, diagnostic and treatment costs and the premium he pays monthly is half of what it would be if he had taken out the policy after his diagnosis.

• Myth 7: Insurance is Complicated and Confusing

  • Reality: While insurance policies may contain legal language and complex terms, insurance advisers are available to help individuals understand their options and make informed decisions. Working with an experienced adviser can simplify the process of selecting and obtaining the right insurance coverage tailored to individual needs and circumstances.

By debunking these myths and working together with free professional insurance advice, individuals can make informed decisions to protect themselves and their loved ones with appropriate insurance coverage. Remember, insurance is a valuable tool for financial security and peace of mind, and it's never too early to start planning for the future.