Lack of life insurance leaves Christchurch family in dire straits.

Original Article can be found here: http://www.stuff.co.nz/the-press/news/10211442/Mums-death-leaves-siblings-struggling

A 43 year old Christchurch woman recently tragically lost her battle with a very aggressive and fast acting form of cancer. She had a house, a mortgage of $150,000 (which she falsely believed to be closer to $75,000) and two children who relied on the family home to survive. One of her children even had a child of her own, leaving two generations of dependants relying on the family home and finances and unable to support themselves.

Worst of all, she had no life insurance or mortgage protection. Upon her death, those left behind not only had to deal with the life consuming grief of losing their mother before her time but also the financial struggles of having to sell the family home, $8,500 funeral cost, outstanding bills and $7,000 credit card debt. Her siblings Kate and Bryce have set up a crowdfunding page to help them out in their desperate times which can be found at http://www.givealittle.co.nz/cause/KateandBryce (we definitely urge anyone who can to help).

Unfortunately, though it was of course not intentional on this mother's part, investing in life insurance could have averted all of the financial burden on the next generation after the tragedy occurred. We are personally extremely sad whenever we hear of a story like this, as we feel that we could have done something about it. Life insurance, especially for a mother in her early 40s in otherwise good health, doesn't have to be expensive, and this case demonstrates just how much it can help. When others rely on us, we can't just continue to assume that nothing will happen and things will work out, we need to put every safeguard in place that we are able to. It's not about money, it's about people.

Please think about helping out Kate and Bryce and if you want to see just how affordable and beneficial life insurance can be, give us a call, we can help.

Kate and Bryce's Givealittle Campaign

Spratt Financial Homepage

Important Health Insurance Facts from Southern Cross

Last week at the Spratt Financial offices, we received our annual presentation from higher ups at Southern Cross, New Zealand's biggest health insurance providers. Some of the facts mentioned were really interesting so we decided to share!

• A lack of medical insurance is according to statistics the biggest contributor to mortgagee sales in the country. Mortgagee sales for those who don't know, refers to the bank or lender selling a home from underneath the owners when they are unable to make mortgage payments. Unexpected medical, surgical or health costs when someone doesn't have insurance is the main contributor to people losing their homes and that was the most shocking fact of all to us.
• The majority of claims to Southern Cross come from those aged 65. 
• If you drink less than 2 glasses of alcohol per day, are a non smoker and exercise 3 times per week you can receive a 10% discount on your health insurance premiums. 
• The cost of the most common procedures used to treat the following disorders are as follows (based on Southern cross' 2012 claims data):
  - Heart Disease: $38,000 - $57,000
  - Skin Cancer: $800 - $3,900 for removal of lesions.
  - Osteoarthritis: $19,000 - $25,000
  - Prostrate Cancer: $15,000 - $21,000
  - Digestive Problems: $400 - $1,800 for Gastroscopy.
  - Breast Cancer: $7,000 - $12,000 for unilateral Mastectomy.
  - Cataracts: $3,100 - $4,700
  - Endometriosis: $6,000 - $14,000
• For every one dollar paid to Southern Cross in premiums, Southern Cross pays back an average of 90 cents to their members in claims (based on the previous 5 years figures averaged).
• Southern Cross has no shareholders or overseas owners. We were told this is because they would rather service New Zealanders than be beholden to any outside financial interests.
• During the 2013 financial year, Southern Cross paid out $639.1 million in claims.
• Southern Cross currently services 817,822 members in New Zealand.
• In a worrying industry wide trend, Southern cross' member numbers decreased in 2013. Southern Cross numbers dropped by 0.5% compared to an overall trend in the industry of 0.7%. SC are attempting to draw attention to the negative consequences of not having medical cover (including the mortgagee sales example above) to reverse this trend.
• Southern Cross has an A+ financial strength rating given by Standard and Poor's.

Interested in Health Insurance?  Call us on 09 307 8200 or email enquiry@sprattfinancial.co.nz

Finance News Roundup

1. Diana Clement: Reliable Data is Vital for Property Investment - NZ Herald

2. Hundreds of Insurance Claims already made in the wake of the Auckland storm. - NZ Herald

3. Global Insurance Giant gets approval to operate in New Zealand. - Insurance Business Online

4. Reminder: Kiwisaver members get additional government tax credits. - Good Returns

5. International: IMF lowers forecast for US economic growth. - NZ Herald

6. Government slams Auckland Unitary Plan - Interest.co.nz

7. House Prices Up but Volume of Sales Down - Interest.co.nz

Does Generation Y need Insurance?

Today in the office, a conversation came up in which the question was raised, which type of people need insurance the most? Is it mature, middle aged men and women with steady incomes, who have already accumulated some valuable assets that need protecting? Is it older men and women, who may be facing impending medical issues in which health insurance could save them huge fees? Perhaps not many people would answer that it's Generation Y who needs insurance the most. After all, just out of school and starting their lives, they likely don't have much risk of ill health or the loss of any hugely valuable assets. They probably are renting or flatting and don't own a home, and their car might be cheap and second hand.

However, these assumptions might need revisiting. It might just be that the very fact that Generation Y (20-30 year olds) have lower assets and incomes that means they need it the most. How so? Well those with accumulated savings, assets (such as a home or business) have more options available to them if something goes wrong. They could sell the house, sell their shares in the business or fall back on life savings to keep them and their families going. Those without these assets won't have this option.

Let's say critical illness strikes. Generation Y is statistically the most likely to be living pay cheque to pay cheque. With no assets to support them, they'll likely have no way of meeting their cost of living without falling back on relatives or other forms of support that might not even be available to them. Without anything behind them, Generation Y could be one unforeseen mishap away from financial dependance or worse, having nowhere to live or being unable to afford medical treatment or surgery.

What do you think of when you think of Gen-Y? Could they have more use of insurance than older folk?

On the other hand though, living pay cheque to pay cheque doesn't leave much disposable income to spend on insurance premiums. This can make insurance seem like less of a priority. So, what they need is insurance that will protect them, without breaking the bank. Is it possible? And just what insurance should Gen-Y invest in first? We have some suggestions:

1. Health Insurance

Health Insurance should be first and foremost. If you are young enough, you may still be covered by your parents policy, but as soon as this lapses, getting health insurance of your own should be priority number one. Between the ages of 21 and 28 I've been spared more than $15,000 of medical costs because I had insurance. Plus, if you invest in it while you're young and healthy, your premiums will be as small as possible, rather than leaving it until later when pre-existing conditions may have developed, leading to increased costs and complications.

2. TPD (Total Permanent Disability Cover)

The premiums for a TPD policy tend to be much cheaper than a Trauma or Life insurance policy, and it can come in handy if you suffer an accent which renders you unable to return to your job. Since accidents and injuries may be more likely for a younger person than a critical condition diagnosis, TPD could protect you from issues Gen-Y is more likely to face, at a fraction of the cost.

3. Redundancy Cover

Similar to the above, redundancy cover is a cheaper form of income protection policy (previous articles have dealt with this form of insurance in detail), which will protect your income if you are made redundant or leave your job involuntarily. It can also cover mortgage payments if you are paying off your first home, making it a sound investment for not so high a price.

4. Life Insurance

Perhaps not as essential, but depending on your situation, it could be a very good idea. For those with no dependants relying on them and no debts, life insurance is more than likely surplus to your current requirements, but if you have a young family, debt or someone depends on your income to provide for them, life insurance for Gen-Y is a good idea. The younger you are, the cheaper your premiums will be, even moreso if you have a clean bill of health and are a non smoker. So as soon as you have people relying on you or a considerable debt to pay off, think about life insurance as a way to ensure everything is taken care of in the unfortunate event of your passing.

Five Sticky Situations Insurance Could Bail You Out In

1. Being diagnosed with a chronic condition.

As described in one of our earlier posts, at the age of 21 I was diagnosed with Crohn's Disease. Luckily, my conscientious mum had organised me health insurance cover before this happened, and all of my surgery and specialist costs since then have been completely taken care of by Southern Cross. Doing some loose calculations, those costs would have been upward of $20,000 so far, with unfortunately more to come in the future. If I had waited and investigated getting insured after I was diagnosed, I would have either had to cope with a large policy loading or my pre-existing condition may have been excluded entirely. So, having insurance already, before I was diagnosed kept my premiums affordable, and spared me a debt in the tens of thousands.

2. Being disabled in an accident and being unable to work.

Some accidents or conditions can be lived with and managed, and won't affect your ability to earn a living. But many of them will, either for a finite period of time or you may be unable to return to your profession indefinitely. If you have Total Permanent Disablement Cover (which is very affordable in terms of premiums) or Income Protection, you won't have financial burdens adding to your stress during already trying times while you recover. You can focus on getting well, and your family will be secure while you do.

3. Losing Your Job/Being Made Redundant

Unfortunately, it happens everyday. People lose their jobs or are made redundant and left with a whole bunch of worries, including meeting the bills, paying the rent all while finding another job quick smart. As covered a little while back, redundancy cover is a cheaper form of income protection which can protect your income while you search for new employment after being made redundant. As long as leaving your employment wasn't voluntary on your part, you can be covered! Read More Here.

4. Having a crucial person within your business fall ill.

Some of us have more to worry about than just themselves. If you own or manage a business, you may be relying on many key people underneath you to keep your business running, keep it profitable and ensure its managed properly on a day to day basis. If one of these people, say a co-director, a production manager or a reliable member of staff suffers a serious illness, condition or injury, you could be just as stuck as if one happened to you yourself. Key Person Insurance Cover is designed for this circumstance to protect your businesses profits if one of your most crucial employees goes down. 

5. Being stuck overseas due to flight cancellations, injury or natural disasters.

Another one that happened to me recently! After American Airlines cancelled my connecting flight back to Los Angeles, I was left stranded in Pensacola, Florida with no way to make my flight back from the States to Auckland. My case was comparatively minor to cases of people in my life I've known of, but paying for the extra nights hotel, meals and transportation would still have set me back close to $1,000 without travel cover. Other's I've known have had it far worse as the Icelandic Volcano eruption a few years back grounded flights all over Europe for the better part of a week, forcing them to watch as their extra costs skyrocketed. Trust me, being overseas hoping that your plans and schedules will all fall into place seems a lot more of a stretch to me than it did before. 

Thanks for reading! Visit www.sprattfinancial.co.nz for more info.

Partnership with Master Plumbers

Spratt Financial Services is extremely proud to be a partner of Master Plumbers and offer its members the best in insurance. Our specially designed Master Plumbers Insurance Plan designed in collaboration with AIA Insurance means that if you are a Master Plumbers member, you'll get a better deal on your insurance than you'll find anywhere else on your own!

For more information on our Master Plumbers Insurance Plan, contact plumber@spratt.co.nz or visit our website at www.spratt.co.nz. Remember, if you're in need of the best plumbing service, you can trust Master Plumbers, just like we do. You can find the closest one to you with this handy search straight from the master plumbers website: Find a Master plumber near you!

Insurance News Headlines 19/05/2014

1. Christchurch Earthquakes - The Lessons Learned (Video) - Insurance Business Online 

2. IAG Welcomes Commission Approval for Lumley Deal - NZ Herald

3. 3 Reasons Retirees May Not Be Doomed After All in the wake of the Economic Downturn - Yahoo Finance NZ

4. 60% of Christchurch Earthquake Claims have now been finalised - Interest.co.nz

enquiry@sprattfinancial.co.nz

Redundancy Cover: How it Works.

Redundancy Cover (also sometimes known as Loss of Job Cover) is a more specific form of income protection that will protect you from the loss of income that you could suffer if you are made redundant or lose your job involuntarily. As a more specified and less broad type of cover, redundancy cover is far cheaper in monthly premiums than general income and mortgage protection policies, making it a sound option for those who want to be protected but cannot afford the premiums for more costly Income Protection cover.

In general, payment will begin 30 days after you are made redundant or lose your job. From there, monthly payments will help you manage your expenses for a period of up to 6 months to allow you enough time to get back on your feet. Furthermore, you can still claim on your redundancy cover even if you have received a redundancy payment from your employer when you were let go. This will not effect the amount paid out or the frequency of the payments in any way. You can claim TWICE in total for any redundancy cover benefit, meaning that you are covered for a period of 12 months in total, as long as you have been employed a certain amount of time in between the two six month claim periods.

The sum assured of a typical redundancy policy will be calculated as follows:

- 40% of your income before tax.
- 110% of your mortgage payment.

Whichever of these figures is higher will be your sum assured, and when you claim on your policy that is the amount you will be paid each month to help you maintain your lifestyle while you look for the next job that's right for you.

One of Redundancy Cover's benefits is that it allows you the security to take the time to find the job that's right for you and not having to make impulsive decisions based on financial strain.

Unlike other forms of insurance, Redundancy Cover is NOT age related, and premiums will NOT increase each year due to age. This means that you will know that redundancy cover will always be affordable and will fit within your budget as the years go on.

Recently, we have had a client who was extremely thankful for the redundancy cover we had arranged for him. Out of the blue, he lost his manufacturing job after having only recently acquired a new house and with it a large mortgage. When he claimed, the redundancy cover kicked in and covered all of his mortgage payments for him, allowing the family to live comfortably off the income of his spouse. Without it, he told us, he would have been forced to lose his house that he had worked 15 years to be able to afford a downpayment for. The prospect of that rightly terrified him, and with a shortage of specialised manufacturing work in his region, it took him until the fifth month after his redundancy to secure new employment. Now, he has resettled in his new job, has kept his house and the family finances are in good shape. All it takes is a single thing to go wrong and he could have lost everything he had worked so hard for, we were extremely glad that he didn't. He was too.

Redundancy cover does work, and it is not expensive. Regardless of whether you have other forms of insurance or none at all, redundancy cover could be a very important boon to your life and won't set you back all that much. If you have any questions of just how much you'll pay, or you wish cover to be arranged for you, we can help. Just drop us a line anytime.

Staying Healthy: Can Chocolate Prevent Obesity and Diabetes?

I know, just by reading that headline you must be excited. I know I am! But is it too good to be true? Or is it the legitimate, scientific reason to eat a bunch chocolate that we've all been waiting for?

In a mouse study, led by Andrew P. Neilson at Virginia Polytechnic Institute and State University,  the researchers found that there was a certain antioxidant in cocoa that for all intents and purposes prevented mice from gaining weight. It also significantly lowered their blood sugar levels. Even better, this isn't the only study that's out there that suggests the benefit of chocolate for your health. 

Medical News Today recently reported on a study claiming that eating 70 g of dark chocolate every day could reduce the risk of atherosclerosis, the medical term for the thickening and hardening of the arteries. Other research claims that hot chocolate could be useful in preventing memory decline in old age. The paper concludes by finding: 

"There is a strong correlation between neurovascular coupling and cognitive function, and both can be improved by regular cocoa consumption in individuals with baseline impairments. Better neurovascular coupling is also associated with greater white matter structural integrity."

Yum. And healthy? It seems so, in moderation at least.

What is it about chocolate that contributes to weight stability and helps prevent diabetes, and how can we maximise that effect? The data from the study at first suggested it is the flavanols that chocolate contains that help provide this benefit. However, study participants then consumed both dark chocolate and regular chocolate with added flavanols and both displayed the same effects. This may suggest that another ingredient or bodily reaction to the chocolate is helping cause these effects.

In any case, I doubt that many of you need an excuse to eat chocolate, but here's as good of one as any. Best to stick to moderation though, these benefits were shown in human subjects with a consumption of 70g of chocolate per day.

Other articles in our Staying Healthy series:

Weight loss tips from the experts.

The incredible health benefits of honey.

How to lose that troublesome belly fat. 

www.sprattfinancial.co.nz

Trauma Insurance: How a friend ended up $30,000 better off.

One of my personal friends recently went in to the specialist for a routine check of his heart.

The check determined that one of his arteries was clogged, and they moved him to immediate surgery to have a stent inserted. The surgery was non invasive, with a stent that eventually dissolves after widening and freeing the artery again. After a brief period of recovery, he was back on his feet.

My friend did have medical insurance cover which immediately covered his $5,000 bill for the surgery and that was of course very helpful, but his real boon came from the Trauma Cover he had invested in 5 years earlier.

Many forms of Trauma Insurance have partial payout provisions for a large variety of conditions, where if you are diagnosed with them, you are eligible to claim a certain percentage of your policies sum assured. In his case, he had $125,000 worth of Trauma Insurance. After enquiring and putting in a claim, the insurer paid him out 25% of his sum assured for the operation, as it met the conditions for the cardiac partial payout. So just by having trauma cover, not only were his medical expenses completely covered, he ended up with a financial windfall of $31,000!

It's not every day that you can go in for an expensive medical procedure and have it end up making you 30 grand richer, but with the right insurance, this is definitely possible, and it happens far more often than you would think! For those of you who have existing Trauma Cover, keep this in mind and closely read your policy wording to see which conditions will trigger a possible claim. We have encountered a number of people who could have been paid out partial or full trauma payments for things they did not even know they were covered for! For those of you who don't have trauma insurance, think seriously about it, it has certainly made my friend a very happy man!

If you have any questions about your existing cover or what insurance options are available to you just drop us a line anytime.