Financial Services Council: Unexpected sickness could destroy families.

In a recent report, the Financial Services Council of New Zealand said Kiwis were under-insured for loss of income from sickness. 

Financial Services Council chief executive Peter Neilson said a two-year research project by the FSC showed just 15% of households had income protection insurance.

All were covered for the possibility of an accident by ACC, but they were more than twice as likely to suffer a serious illness.

Neilson said: “Each year 15,000 primary income earners fall seriously ill and are unable to work for six months or more. For a person on the M tax rate, the sickness benefit is $341.60 a week and this is means tested. If another person from the household is earning income, many families find they are too rich to get a household income tested sickness benefit, but too poor to pay the rent, mortgage or food bills.”

He said most Kiwi families would not be able to pay their mortgage or rent four weeks after using up their annual or sick leave.

For someone on the M tax rate, the sickness benefit is $341,60 a week, means tested.

Neilson said: “If another person from the household is earning income, many families find they are too rich to get a household income tested sickness benefit, but too poor to pay the rent, mortgage or food bills.

Taken from Good Returns article: 'Sickness could destroy families'

Comments: This article is definitely representative of our experience in speaking with members of the public and our own friends and families. It is definitely worth stating that simply put, out of the 85% who have no form of income protection, some simply cannot afford it. However, a good proportion can, and it is worrying that some Kiwis adopt a laissez faire attitude to the possibility of sickness and disablement. We have seen and dealt with many of those 15,000 primary income earners per year that fall seriously ill (including Justin, whose story can be found here). The majority of cases have wished that they had some form of protection in place when the disastrous circumstances of being unable to support a family and a way of life struck.

As Kiwis we can be very tough, self reliant, can do people, but often this can give rise to the mistaken feeling of invincibility, which the statistics show is simply unwarranted. Obviously there needs to be a middle ground between spending too much of the money you don't have on income protection and not having any at all and facing disaster in the event of severe illness.  However, the statistics from other western nations dwarf our percentage of 15% (for instance, 27% of American workers have income protection), suggesting the "she'll be right" attitude of New Zealanders may be getting in the way.

Securing insurance doesn't have to be a chore, or exceedingly expensive. Talk to our team of advisers and let them go to work for you. There is a great chance we can keep your costs down and make income protection cost effective and manageable, so that you don't have to face the trauma of facing illness and disablement without proper cover.

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Critical Illness: What are the Chances?

One of the main things people want to know regarding insurance are the best researched facts and figures about what circumstances they are likely to face in life, and what they need to be ready for. For instance, if there is a high statistical risk of developing a critical illness that affects one's ability to work and make a living, people tend to seek out cover for themselves, their families or their business. In contrast, if there is a very low statistical risk, people tend to not choose to take on extra monthly cost, making an informed decision that if the chances are low it is best to save their hard earned money.When it comes to Trauma/Critical Illness cover (aka Living Assurance), luckily the statistics are clear and readily available.

1. Between the ages of 30 and 64, one in five men (1/5) and one in seven women (1/7) will suffer a critical illness. This means that a working couple has a one in three chance (1/3) of having one of its members suffer a critical illness.
2. In 2009, 20,875 new cases of cancer were registered in New Zealand.
3. The advances in treatment and medicine mean that 52% of male cancer patients and 59% of female cancer patients will recover and be alive five years after diagnosis.
4. The University of Auckland has revealed a 40% decline in the number of deaths after a stroke, however the surviving patients as a result suffer from an increased number of impaired level of consciousness and mobility following strokes.
5. Only 6% of deaths in New Zealand annually are accidental or sudden. 94% come after a protracted disablement process, during which time it is highly likely that income and career trajectory will be affected.

Taking these facts into account, it becomes clear why it is necessary to have a plan and cover that is adaptable to the circumstances as they are. It is up to you whether or not you feel the risk is worth taking, however if you decide it is not and you want to be protected, there is one more thing to think about. Insurance can be complicated, and getting a simple plan together may not be comprehensive enough to protect from what has proven to go wrong with New Zealanders.

We know it is a daunting process and involves a lot of intensive research, so feel free to take advantage of our intensive knowledge base and ability to get the best deals from the insurance providers based on your specific needs and life circumstances. We can go to work for you and make sure you are covered.

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Insurance Advice: Why just Life Insurance may not be enough.

In our experience, there are several crucial mistakes that people tend to make when attempting to secure their own insurance plan. Some of these mistakes can result in catastrophic financial circumstances if something goes wrong with their health or they find themselves facing physical disablement. We definitely don't want to see that happen! A lot of these mistakes are based around incorrect assumptions about insurance and the true circumstances they may face with their health.

One of the most critical mistakes we often see is that people tend to assume that basic life cover, designed to pay out upon impending or actual medical death is sufficient to cover their financial needs. Coupled with this is an assumption that tragic health issues tend to arise quickly and result in a relatively quick passing, such as through cardiac arrest or in an accident.

Unfortunately, the official statistics provided by New Zealand Health Information Services  do not favor such assumptions. New Zealand has an official death rate of around 30,000 per year. Sudden deaths through accidents account for only 6% of total deaths per annum. This amounts to a mere 2,700 out of 30,000 deaths. A huge 94% of all deaths are due to medical problems or illness; a huge 28,200 out of 30,000 deaths.

As we can see from this graph, in the majority of cases, the reality of the process is much different than most people expect. At the point on this graph where one finds themselves disabled by illness and no longer able to work, typical life insurance designed to pay out on impending or actual death will not kick in, all the while you still have to face the crippling burden of a mortgage, rent, electricity, food and debt management with no regular income to depend upon.

There is a solution to this, it just takes a little time to sit down, plan out your real needs and design a plan that will cover your real needs, not just your assumed ones. Perhaps the solution is a broader plan, with lesser life insurance but added trauma cover or Total Permanent Disablement cover. There is no one size fits all solution, and that's why we recommend talking to a professional before you commit to purchasing insurance. We can take you through your personal financial situation and get you the right insurance cover to make sure you and your family are protected, for the most competitive prices on the marketplace. Our service is completely free and no-obligation!

Email us today for help with your insurance.

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