How to save money on your insurance.

BEFORE YOU GET INSURANCE:

1. Think about your sum assured.

The sum assured of your insurance policy is the amount that the insurers will pay you when you have to make a claim. As the sum assured of your insurance increases, so will the premiums that you pay. Take the time to do some research and think about what circumstances in your life could arise. Plot out a set of possible costs and ask the right questions (for instance, 'If I were to be diagnosed with cancer, how much money would I need to keep my family going and support them?). When you have come up a figure as best you can, add to the figure a bit and take that as your ideal sum assured. Rather than just assuming costs and selecting a round figure such as $200,000 which could be too high, taking the time to plan could end up saving money on your insurance. For a deeper insight, you could always consult a financial adviser who can plan out exactly what you need your insurance cover to be.

2. Scour the marketplace or get a quote from several brokers.

Every insurance provider is different, with different waits, different conditions and different policies. It is crucial that you take the time to go out into the marketplace and find the best deal possible. Jumping at the first offer could leave you paying premiums you don't have to. If you wish to go it alone, compare the major insurance providers plans and offers. An insurance broker can help you complete this process with even better results, as reputable brokers generally have deals in place with major insurers and can get you even better rates. Get quotes for your insurance from several brokers to compare and then select the one that offers you the best deal to save money. Also take into consideration the ongoing service they offer as well as the quality of the cover they are offering.

3. Think about adding an excess.

If you are looking at a medical or fire and general insurance policy (such as home, contents or vehicle insurance) adding an excess can reduce premiums significantly. Adding a $500 excess for example, means that the first $500 of any incurred medical or damage costs is agreed to be paid by you, with the insurer covering the rest in their claim. Having an excess can be inconvenient, but if you claim rarely, it can more than pay for itself with the savings in premiums.

4. Extend your wait period - Income/Mortgage Protection/Redundancy Cover.

In an income protection or mortgage insurance policy, the wait period is the amount of time you agree to wait after your claim is accepted for insurance payments to begin. For instance, with a 13 week wait, you will begin receiving your income protection payments 13 weeks after your claim is accepted. The longer your wait period, the cheaper the premiums you will pay become. If you are part of a working couple who can sustain themselves on one income for a period of time or if you have savings set aside for a rainy day, this could be ideal in saving you money.

5. Select the right optional benefits.

Many policies can include optional benefits or extras. Medical policies for instance can be more basic or comprehensive, including such things as hospital cover and GP costs. Think about the benefits you are truly likely to need and which ones are not required. An adviser can help with this process, setting out all the benefits against your current personal financial situation.

AFTER YOU HAVE INSURANCE:

1. Review your insurance regularly.

We review our clients insurance annually, and the reason for this is that things change, both in life and in the insurance marketplace. A new product may have come on the market, your life circumstances may have changed or better deals may now be available. If you have your own personal insurances that are not through an insurance broker, be sure to take the time to review your cover on a regular basis. Ask yourself how well it is working for you, if anything has changed in your life that may allow you to reduce your cover and search for new deals that are out there. If you are with us, we can do all this for you. A regular review can save you money in the long run.

2. Are you a smoker?

Keep in mind that if you were a smoker at the time of taking out your insurance policy, you can save a considerable amount of money on your premiums by quitting. Several of our clients in the past have neglected to inform us that they quit smoking years ago when their policy was continuing under an assumption of smoking. Once you have quit for a certain period of time, your policy can be changed to non smoker, and you will be shocked at how much money each month you are saving.

3. Think about the cheaper, more specific covers.

If you really need to save money on your insurance, you can think about replacing some of your insurance with their more specific, less expensive versions. Income protection can be more costly when compared to both Mortgage Insurance and Redundancy Cover. So, if you are mainly worried about covering your mortgage payments or maintaining an income in the face of redundancy, these cheaper policies can be better than a full on Income Protection policy. Discuss your options with a professional and make an informed decision.

Visit our official website for more information on our services.

Want a free, no obligation review of your insurance needs? Email enquiry@sprattfinancial.co.nz or call 09 307 8200 today.

Finance News Roundup 10/9/2014

1. People prioritising risk to their possessions over risk to themselves when it comes to purchasing insurance. - Insurance Business Online

2. Is Term Life Insurance for seniors over 60 a smart buy? - Evan Carmichael

3. Britain faces financial storm as world prepares for possible Scotland breakaway. - Daily Telegraph

4. Australia and New Zealand are the world's greenest real estate markets - Property Observer

5. Crashes caused by uninsured drivers costing the country millions. - The Northern Advocate

6. Peter Lyons: Is New Zealand's prosperity real? - NZ Herald

7. How to Afford an Investment Property - Even when you can't. - Your Investment Property Mag AU

Insurance Advice: Avoiding Non-Disclosure

When it comes time to secure your insurance, most of us are familiar with all the forms we're asked to fill out and tests we're expected to undertake. These processes are on the part of the insurer, who is attempting to determine 'level of risk' that you represent to them as a business. Basically, if you are in tip top physical health at a young age and you're applying for life cover, you don't pose much of risk for an insurer to pay out a huge amount in the near future. Thus, your premiums will be lower and your policy will have less exclusions and no loading.

On the other hand, if you have gone through significant health issues in your life or are of a more advanced age, you are more of a risk to the insurer and thus premiums will be higher, exclusions may apply as well as some loading.

This process requires complete honesty on the part of the person applying for insurance, because unfortunately, insurance is a business and purposefully or unintentionally misleading the insurers on your health status or past conditions you have had can sometimes be deemed a violation of your contract, resulting in the insurer refusing to pay your claim or paying a reduced amount.  If it comes out during your application for a claim that any of these conditions were present and not disclosed to the insurer, you risk losing your payout entirely.

When it comes to informing your insurer of your health conditions and history, silence definitely is not the best policy.

So when you're filling out those forms, how do you know what to disclose and what not to? Surely you don't need to mention the leg cramps you had when you was 18? Well, the safest thing to do is simply declare everything you can think of. Not the fact that you had a cold or got the flu, but ailments, conditions, injuries, allergies that you have suffered throughout your life. If you have any doubt whether to include it, include it! At the very least get in contact with our team and ask, and we can tell you with our insurance knowledge whether or not this is something you need to declare or not.

Never assume something is irrelevant. The insurer may have a differing opinion and it could cost you a great deal. If in doubt, ask us, or contact your insurer directly. We have seen non-disclosure ruin claims and leave people in financial ruin. The good news is, with vigilance and honesty, you don't have to worry about it happening to you.

Finance News Roundup

1. NZ Herald Finance News Q & A including Kiwisaver members protecting themselves from a big drop in balance. - NZ Herald

2. Advice: Misleading an insurer can lose your cover. - NZ Herald

3. NZ Dollar headed for weekly decline against the US - Yahoo Finance

4. Fonterra cuts new season milk price. - Yahoo Finance

5. Collection of current home loan rates. - Good Returns

6. Why Total Permanent Disability Cover is underbought. - Good Returns

7. How the housing boom has cost everyday New Zealanders dearly. - NZ Herald

Just For Fun: Alien Abduction Insurance? Yes, it exists!

When we think about the events likely to befall us in life and the things we should consider protecting ourselves against, most of us probably would consider ill health or car accidents. Perhaps even violent crime or theft. I wonder how many of us would consider that they need protection for an alien abduction?

Apparently, the answer is, enough for a renowned insurance provider in the UK to offer it as an option.

Simon Burgess, the former Managing Director of British Insurance has put the option to the public; an insurance policy redeemable if the insurance person is abducted by aliens. "Of course, the burden of proof lies with the claimant", Simon says. Well naturally. I do wonder what would constitute such proof though. A spaceship in the backyard? Some alien fingerprints on the clothing?

Well, the good news for potential buyers is, alien abduction insurance is cost effective. A whole $1.5 million worth of cover will only cost the discerning citizen $150.

Remarkably, Simon is not the only one to have offered this. The very first company to offer UFO abduction insurance was the St Lawrence Agency in Florida. The company says it has actually paid out two claims! They also say that over 20,000 people have purchased the insurance, including a former Harvard professor who had written on aliens. Lloyds of London however, have taken a rather dim view of view saying that the extreme majority of those buying the policy are "feeble minded".

Should we be taking this more seriously? After all, it's a big universe out there and several UFO claims are well verified by extremely credible individuals. Maybe it is a good thing that some insurers out there are providing the option. On the other hand, I personally would like to think if you're getting abducted by aliens, getting some sort of  financial compensation for it probably isn't your greatest concern!

What do you think? Would you get protected from ET, or is all of this just a type of silliness that's out of this world?

http://en.wikipedia.org/wiki/Alien_abduction_insurance

Probably not a bad alien to be abducted by.

Probably a VERY bad alien to be abducted by.

Financial News Roundup

1. Why women get a raw deal when it comes to insurance. - Diana Clement (NZ Herald)

2. Submarine Businessman charged over a $22 million insurance scam. - NZ Herald

3. Implementing a long term wellness solution for your business. - Southern Cross

4. How to manage finance for a modern blended family. - Spicers.co.nz

5. How telematics is revolutionising car insurance. - NZ Herald

6. Tower Insurance has sold its remaining Life Insurance business to Foundation Life - Good Returns

7. Auckland's house price average rises to record high. - NZ Herald

For more info on our services, head to www.sprattfinancial.co.nz

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.