New Zealand Insurer Brings back Full Replacement cover for houses.

Tower Insurance has gone against the prevailing wind of house insurers to offer a full replacement option for houses destroyed by fire. Most insurers in the industry moved to a sum assured model at the beginning of 2013, meaning that they would pay out an agreed upon value (the sum assured) if the house was damaged or destroyed by fire. The sum assured model often sometimes not provide sufficient funds to totally replace the value of the house, just going most of the way.

“Being able to provide full replacement for fire means one less worry for homeowners in the traumatic event of a fire,” Tower CEO David Hancock said. “Tower can guarantee your home will be fully rebuilt if it’s destroyed by fire, regardless of the cost or the sum you’re insured for.”

Providing a full replacement option should set Tower apart in the fire and general insurance marketplace and give customers another option for covering their houses which is always a good thing. Tower says that they made the move to bring back full replacement in light of comments from their customers who found the sum assured format confusing. “People want to know that if the worst happened they can at least know that they will get their house back the way it was.”

If Tower's move proves successful, and they can maintain affordability, it will be interesting to see if other insurers follow suit. What do you think of Tower's move? Do you find the current home insurance confusing? Would you rather go with a full replacement option?

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Spratt Financial Newsletter (October/November 2014)

To check out our official Spratt Financial Newsletter in PDF form, click here.

This October/November 2014 issue contains:

- How to maximise your Kiwisaver results.
- Information on the Hospital Stay Benefit on Income Protection and how it can benefit you.
- Ways to save money on your Insurance.
- What's new with the company?

Financial News Roundup October 2014

1. Some Insurers refusing payouts to injuries suffered while drunk. - NZ Herald

2. Southern Cross posts a $1 million annual loss. - NZ Herald

3. BNZ cuts its 2 year mortgage rate. - Interest.co.nz

4. Auckland house prices rise to a new record. - NZ Herald

5. Fidelity Life posts record result. - Good Returns

6. Here's how Generation Y can buy a house. - Andrew King

7. NZX 50 is weathering the financial storm. - Mark Lister

Visit us at www.sprattfinancial.co.nz 

News: Onepath Life Insurance to become truly One.

Onepath Life Insurance has announced that it will be consolidating its two life insurance companies into one. The move is primarily about simplification, and will not result in any changes to its existing insurances. Currently, Onepath has one company which services advisers and brokers and one company which directly sells their life insurance product, distributed through banks.

The process has begun, subject to approval from the Reserve Bank. There is anticipated to be no issue moving forward, and the merger is expected to be approved and completed. Onepath says that the merger will enable them to avoid two companies worth of compliance costs and streamline their services, ultimately aiming to provide a future benefit to customers.

Onepath is also planning a major product relaunch next month which will feature a focus on income protection. We will keep you posted with what this entails, what changes could be made and how this could benefit you as news emerges.

Changes are on the path ahead for Onepath.

Hospital Stay Insurance Benefit - How it Works

Hospital. That smell, those beds, that food. Trust me, as a regular visitor to one, I know the drill. It sure isn't my favourite place in the world to visit. But if I was to get re-imbursed for it, that sure might make it a heck of a lot more tolerable. That's what we're talking about today, a benefit on your insurance that could result in just that.

If you have an Income Protection policy you likely already have this benefit (although it always pays to read the policy wording and check, because different providers and policies can vary). Basically, what it means is that if you suffer an illness or accident that necessitates a stay in hospital, you can claim on your hospital benefit. The benefit is designed to protect you whilst you're in hospital, aren't earning an income and possibly can't manage the bills such as your mortgage/car payments/rent etc.

The costs of a hospital stay on your life can be mitigated with Income Protection.

For instance, let's say Mike has a policy with a hospital stay benefit and suffers an illness which lands him in hospital for two weeks. The way the payout is usually calculated is that you will receive 1/30th of your agreed upon monthly income protection payout for each day you are in the hospital. Mike's monthly sum assured is $5,000. 1/30th of $5,000 is $166. That means Mike will receive $166 for each day of his hospital stay. Since Mike stayed two weeks, he is eligible for a total payout of $2,333.

We're trying to draw a bit of attention to this benefit, because recently we have had clients unaware of the fact that they were eligible for a claim on hospital benefit until we told them. So take a close look at your policy wordings and if you've had a hospital stay in the past, you might be eligible for some financial help.

Visit us online at www.sprattfinancial.co.nz for more info.

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.