What is Whole of Life Insurance?

Much like a regular term life insurance policy, a Whole of Life policy is designed to provide a sum of money (the sum assured) to someone else or to a trust upon your death. It provides an increasing level of cover which gradually builds up a cash value through to a chosen maturity date as premiums are paid. Whole of life cover is the only form of life insurance that can be paid out whilst the policy holder is still alive, if they survive past the agreed upon maturity date of the policy.

Also, whereas a term life policy covers you for a certain period of time (for instance, until the age of 65 or for a certain amount of years after you take out your policy), whole of life insurance covers you for your entire life. As such, it is generally a lot more expensive than regular term cover and has become less and less prevalent in the NZ insurance market over time. Today, few insurers here offer whole of life cover, but many policies taken out in the past are still in force and active across the country.

Whole of Life insurance is also different from other forms in that it can have aspects which function as an investment. For some whole of life policies, premiums paid are invested into a fund and can be refunded to the policy holder if performance is greater than expected. Sometimes, premiums are expected to be paid for the entire life of the policy (as long as the policy holder lives) and in other cases, the premiums cease at a certain age although the cover goes on until death. This is established when the policy is taken out, as well as the sum assured and the fixed premiums.

Whilst few providers offer whole of life policies in New Zealand these days, if you have one that is currently active and you have any questions about your policy, you can use our website's contact form to get a reply quickly and easily at anytime.

Merry Christmas and Happy New Year from Spratt Financial.

The whole team at Spratt Financial Services wishes you an amazing Christmas and an extremely prosperous New Year! We hope that 2015 is the year in which all of your financial dreams come true. Stay safe on those roads and enjoy the special time with your families, whether you're at home or away.

Spratt Financial Christmas News Roundup (Part Two)

1. Tips to avoid becoming a Christmas burglary statistic. - Yahoo.co.nz

It's an unfortunate fact that burglary is rife during the festive season when many of us are away on holiday. Here are some tips to stop this from happening to you. Home and contents cover is a good start, but it's a good idea to be prepared, vigilant and take precautions to make sure your Christmas is as happy and stress free as can be.

2. Onepath life introduces new products to meet consumer demand. - Good returns

In the most significant product enhancement in years, Onepath has released two new income protection covers and one redundancy cover, including enhanced features such as new loss of earnings cover and 115% cover on mortgage repayments.

3. Rising housing costs hit wallets hard. - Stuff.co.nz

Average NZ incomes have not risen at a high enough pace to keep up with rising housing costs. Whilst incomes have risen 3.1%, the average spent on housing has jumped by more than double this figure, by 8.6%.

4. Why some people work on Christmas Day - BBC News

Spare a thought for those of us working on Christmas day, providing valuable service. Here are some of their stories courtesy of the BBC.

5. Forecasters predict a warm Christmas with a chance of rain. - NZ Herald

The last weeks, Auckland has experienced some horrendous weather on and off, the weather for Christmas is forecast to be warm, with a chance of rain. Fingers crossed it passes us by, surely we are due for some good stuff!

6. Top 10 hot items for Christmas. - NZ Herald

Statistics from recent Trademe searches reveal the hottest Christmas purchases for New Zealanders in 2014.

Spratt Financial News Roundup

1. Five minutes with the head of Zurich New Zealand Claims department. - Insurance Business Online

Here, Brian Chikanya related that he believes that insurance products are very often misunderstood and this is one of the things about the insurance industry he wishes to change. We do too, both by helping simplify the insurance process, as well as better explaining the benefits to clients and the public.

2. A Christmas treat for the needy in Wairarapa on Christmas. - NZ Herald/Wairarapa Times

Carterton residents who would otherwise be alone this Christmas, or those in need of a good Christmas meal can congregate at the Carterton Events Centre where for 14 years, volunteers have dedicated their day to providing a wonderful community experience. A nice story to put a smile on your face this Christmas season.

3. Kiwis warned not to leave valuables in their cars. - NZ Herald

One major car insurance company paid out $810,000 in car theft claims, and in the wake of a survey in which a third of New Zealanders admitted to leaving valuables in their car, Kiwis are warned to take valuable items with them this Christmas.

4. Aussies currently leading the way with Health Insurance. - NZ Herald

Only 12.5% of New Zealanders over 65 are covered by health insurance, as opposed to a comparatively huge 52% in Australia. Australian investors have become excited about health insurance, showing us in New Zealand a possible way forward for the industry.

5. Kiwisaver bill has first reading in parliament. - Good Returns

This proposal could have a huge impact for Kiwisavers as it would allow members to withdraw Government tax credits, as well as their own contributions, and also doubles the subsidy for first home buyers. We will keep you and all of our clients currently with Kiwisaver updated on the progress of the bill.

6. One in five New Zealanders possibly renters for life. - Stuff.co.nz

The harsh housing market, especially in Auckland, is leading Kiwis to accept the possibility that they may be renters for life. Even in the current market however, there may be finance options available to make first home buying a reality. Send us an enquiry and our mortgage/lending team might be able to make your dreams of owning a home come true.

The cast of Friends helps with your insurance decisions.

Ross, Rachel, Chandler, Monica, Joey and Phoebe. Everyone knows the cast of Friends and their crazy New York lives. Friends was easily the most popular and well recognised sitcom of the nineties and the early 2000s. But what on Earth does this have to do with insurance? One of the questions people tend to wonder about is, what type of insurance do I most need? So let's use the example of some of the characters most of us know and love to explore some possible answers. Maybe it will help you decide what cover you should be prioritising.

1. Monica Geller

Monica is a little bit obsessed with her environment. She needs to have everything in the right order, her possessions accounted for, stacked and in pristine condition. Someone like Monica would most likely not know what to do with herself if her stuff and her environment was damaged, stolen or broken in any way, shape or form. So, Monica's first priority really should be some good quality home and contents insurance so that she can replace all that important stuff if something should go wrong. Are your possessions your world? Secure your home and contents first.








Recommended Insurance: Home and Contents Cover

2. Ross Geller

And then there's Monica's brother Ross. Ross is a paleontologist and a university lecturer, and he also has two children to look out for, one from his ill fated first marriage and little Emma with Rachel. Thus, Ross has a lot of obligations that he needs to fulfill. Rachel may have a decent job with Ralph Lauren to help out, but he wouldn't want the whole burden to be placed on her should something happen to him. For Ross it may be a close call between Income Protection and some Life or Trauma Cover. Income Protection would ensure his money from his job would keep coming in if he was injured, disabled or sick. Life cover would provide his children a lump sum payment if Ross passed away suddenly. Perhaps both would be a good idea.

Recommended Insurance: Life Cover and Income Protection.

3. Joey Tribbiani

Joey is a fun loving aspiring actor who had one brief brush with fame playing Dr. Drake Remoray on daytime soap Days of our Lives. Since then though, roles have been sporadic at best, including playing opposite a remote controlled robot and being a butt double. Yes, a butt double. With an income that's not fixed, Income Protection wouldn't be the best option for our pal Joey, but with the way he eats and the lifestyle he leads, he should definitely first and foremost be looking at some health insurance. We all remember that time he got a hernia and had to act on through it!

Recommended Insurance: Health Insurance

4. Phoebe Buffay

Phoebe had a hard childhood and past, spending most of it getting an education on street living. She's a little out there and wacky, but in her heart of hearts is generous, giving and kind. For most of her life, she's had to make her own way in the world and depend on herself. To that end, Phoebe became a beautician and a masseuse to help her pay her way in the big city. Being a masseuse requires her to be fit and able at all times, so it would be a good idea for Phoebe to protect herself against a disabling injury which would stop her from practising her chosen profession. A specialised kind of TPD cover could be the best option, especially since this can be more cost effective.


Recommended Insurance: Total Permanent Disablement Cover (Own Occupation Option)

5. Chandler Bing

Being married to Monica, Chandler might not get the first choice of insurance in the household! However, after moving away from New York to hopefully start a family with his wife in the country, Chandler might want to look at protecting his new mortgage should anything go wrong with his health or if he loses his job. Mortgage repayment insurance combined with some redundancy cover would be a cheap and suitable option to get his new life off to the best possible start. Chandler's mouth sometimes gets him in trouble, so some health insurance couldn't be the worst idea either!



Recommended Insurance: Mortgage Protection, Redundancy Cover and perhaps some Health Insurance.

6. Rachel Green

In the early days of the series, having the right insurance cover was probably the last thing on Rachel's mind. Her rich father took care of her bills and her accomodation and most likely was her de facto insurance cover. Rachel came a long way since then though, becoming an independent woman with a job at Ralph Lauren and a beautiful baby girl to support. The top priority for Rachel now with a newborn baby should be getting her child covered so her medical expenses will be paid for if something should go wrong with little
Emma's health. If she acts quickly, within the first three months after the baby is born, any pre-existing conditions the child has will be covered as well.

Recommended Insurance: Health Insurance for herself and her child.

Always remember, if you need help or have any questions with what insurance could be right for you, you can ask anytime through the contact form on your right, or by email at enquiry@sprattfinancial.co.nz!

Insurance Claims Statistics and Facts

Below are a collection of facts and statistics around claims and policies which may help you navigating the tricky waters of insurance:

1. 16% of Life Insurance claims are paid out early for Terminal Illness.

Some may be unaware that your life insurance can be paid out before the policy holder's death in the event that they are diagnosed with terminal illness. This happens in 16% of life insurance claims and can assist the family in making important financial decisions and quickly ease the monetary burden during this difficult time.

2. Life Cover Claim Reasons:

26% Heart Related (Cardiac Arrest, heart disease etc)
26% Cancer
12% Pneumonia
6% Stroke
2% Self Inflicted
1% Diabetes
1% Accident
11% Other
15% Unknown Causes

3. 50% of Trauma/Critical Illness Claims are due to Cancer

Heart related illness in this category accounts for 16% of claims, whilst Angioplasties and Strokes account for 5% each. Trauma cover is a separate form of cover which pays out a sum assured upon your diagnosis with a critical condition.

4. Muscular and Limb Injuries account for 47% of Income Protection Claims from one leading insurer.

5. The average age where Income Protection policies are cancelled is 46.

An extremely unfortunate fact, in light of the fact that...

6. The average age that Income Protection policies are claimed on is 47.

As we get older, we get more susceptible to injury and illness. Think carefully before making any big decisions about your insurance because being left without an income and a family depending on you can be a crippling financial burden.

Any questions about your insurance? Try out our new contact form!

Staying Healthy: Losing Belly Fat.

Staying healthy is always a good idea. Not only can it lead to a longer time on this Earth with a far better quality of life, it can have financial benefits too. The better shape you're in, the less you'll be paying for your insurance as your lessened risk to the insurer results in lower premiums, more cover being available to you and less exclusions for certain health conditions.

In this edition of our staying healthy series, we're going to look at effective ways of ridding yourself of that troubling belly fat. An ample waistline puts you at higher risk of serious health conditions including heart attacks, high blood pressure, diabetes and strokes. Excess abdominal fat triggers a change in the bodily hormone which controls blood vessel contraction, increasing the risk of dangerously high blood pressure, strokes and cardiac arrest. That's reason enough to shed those pounds right there.

Men are at higher risk for heart disease than woman, based on higher incidences of stomach fats.

1. Change your diet.

The calories your body consumes from protein are far more easily burned than the ones consumed from carbohydrates. In fact, up to 30% of the calories you consume from protein will be burned during the process of digestion. White meat from poultry and seafoods are good sources of leans protein for snacks and for meals. Try to substitute as many carbs as possible for healthier proteins and you'll make the task of burning that belly fat a whole lot easier. 

2. Stop over-eating.

It sounds like the simplest thing in the world, but our meals are often way too big, and if you're eating more calories than you're burning, you're gaining weight. It's as simple as that. Try using smaller dinner plates to avoid filling up; if it can't fit on your plate, you won't be eating it! Fill up your smaller plates and leave the rest as leftovers for another day. Also, try drinking a lot of water before eating. The water takes up space in your stomach so you won't have to consume as much to feel full. Eat little nutritious snacks in between meals so you won't feel the need to gorge at lunch or dinnertime. 

Smaller plates means less chance of over-eating. Try it out sometime!

3. Start walking!

Walking is an easy, low impact form of exercise that targets a broad variety of muscle groups, gets you active, burns calories and nearly everyone can do it! I personally have been walking a lot the last few months, over 25 km a week. Start by doing a half hour or a set distance per day at a time suitable to you (I find right when I get up before work is my preferred time) and then gradually build up over time as your fitness level improves. Apps like Runkeeper can be great motivational tools as they track your walk and tell you the distance travelled, amount of calories burned and a bunch of other cool stats.

4. Get the right amount of sleep per night.

A selection of studies have shown that the ideal sleep to prevent gaining of visceral belly fat is usually between 6 and 7 hours. People who got less than 5 as well as people who slept for more than 8 hours per night showed more visceral fat gain over a five year period.

Aim for 7 hours of sleep per night - that seems to be the weight loss sweet spot!

5. Don't just do crunches!

I know that when I start gaining a bit of weight around the middle, my first instinct is to start doing crunches. Whilst this may result in stronger abdominal muscles, it won't do much to handle the layer of belly fat on top. Better exercises are ones that work multiple muscle groups at a time. Try planking or the aforementioned walks or runs.

6. Manage your drinks intake.

Minimise soda, sugary drinks and milkshakes. Maximise water, tea and diet soda. Just a simple step like cutting out that can of Coke from your day can have an impact on your calorie intake and your weight loss. Everything counts!

Other entries in our Staying Healthy Series:

The Health Benefits of Honey

Weight Loss Tips

Can Chocolate Prevent Obesity and Diabetes?

Financial News Roundup

1. Australian Insurer first offer 'Ebola Cover' - Insurance Business Online

2. Business and Finance Weekly Diary - Stuff.co.nz

3. John Key talks Trade and Finance at APEC. - 3news.co.nz

4. 80% of drivers don't admit damaging another car. - NZ Herald

5. Cover for Cancer Screening and GP visits attracts customers. - NZ Herald

6. How to take interest and get results from your Kiwisaver. - Business Day

7. Just For Fun: What kind of insurance do superheroes have that pay for all that damage? - TV
Tropes

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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?

Visit our house insurance partners.

Send an enquiry about home insurance.

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?