Trauma Insurance Part Two: Add Ons

Following on from our earlier post dealing with what you need to know about Trauma Insurance in the wake of its growing popularity among New Zealanders, this post will deal with the different types of Trauma Cover, and the optional add-ons to your cover that can help you get the most out of your insurance.

Most providers trauma insurance comes in two distinct types; Comprehensive and Essential (these names will sometimes vary between insurance companies). Comprehensive provides you with insurance cover for a large number of defined medical conditions, with the full payment of your sum assured if you suffer any of these conditions. Essential provides you with insurance cover for the same amount of conditions, however, you will only get paid out the full sum assured for small group of those conditions. For the others, you will only receive a partial payment. Think of 'comprehensive' as exactly what it says. It covers almost everything, but it comes with a higher cost. Think of 'essential' like 'the bare essentials', less cover but at a lower cost.

Cheaper with partial payments? Or more comprehensive with higher premiums? The choice is yours.

Now let's explore the add-ons to your insurance that can be arranged for either comprehensive or essential trauma insurance.

Specialist and Diagnostic Testing

This add-on benefit is designed to pay for your consultations and appointments with a specialist, which gives you the freedom to avoid the public health wait, get immediate treatment and have it paid for by your insurance. With a Sovereign policy for instance, each person covered by the policy get your specialists and diagnostics covered by $3,000 per policy year.

Children or Maternity Benefit

If you have children and you would like them to be protected under your trauma insurance policy, this is the option for you. If you purchase this add-on and your child suffers one of the defined conditions, it will provide a financial buffer to support you, which generally means that if you have to stop work or your child required specialised care, you are financially covered.

Buyback Benefit

This benefit allows your policy to be reinstated once again after you have claimed on it for one of the defined medical conditions. This is an option for those who wish their policy to continue or if there is more than one person covered to ensure that the others still have protection after one member has to make a claim.

Business Safeguard

This is an option that you can purchase if you are attempting to insure a growing business. Basically, it allows you to increase your sum assured as your business grows or your own personal value to your business increases.

Waiver of Premium Benefit

Perhaps one of the most important add-ons and the one that we certainly recommend the most. Waiver of Premium means that if you are injured or ill, but not with one of the conditions that will trigger your insurance claim, waiver of premium will pay your trauma insurance premiums for you, so that you can keep your insurance cover going.

Total and Permanent Disablement Benefit

If you suffer an illness or an accident that is not covered by your policy, but is serious enough to render you unable to work ever again, then this benefit will kick in and you will receive a full payment of your trauma cover.

That covers most of the add-ons that are offered in the NZ insurance market for your Trauma Insurance. If you have any further questions about trauma or any other forms of insurance cover, don't hesitate to ask.

Visit our official website for more information.

Read part one of our article about Trauma Insurance.

Defining Insurance Terminology.

Fidelity Acquires Tower Life Insurance - What You Should Know

Recently, Fidelity Life has acquired Tower Life, which means that all of the risk policies currently under Tower (Life Insurance, Total Permanent Disability, Trauma Insurance and Income Protection) will now be managed by Fidelity and be dealt with under the Fidelity name. If you have Health Insurance with Tower however, these policies will now be provided by NIB Health Cover.

The good news is that for clients with existing Tower policies, not a great deal is going to change. All of the terms and conditions on your current policies will remain the same and nothing will be renegotiated or changed. Sums assured will remain, as will any exemptions, add-ons to your policy, and no existing premiums will be altered in any way.

The changes will really only affect clients looking to take out policies in the future. With the change, the range of Tower insurance products will no longer be sold and will be replaced by the Fidelity range. If your Tower policy was acquired through us, we will remain on hand to help manage your insurance in the same ways as before and nothing will change.

For more information about the changeover or if you have any questions, feel free to call us anytime on (09) 307 8200 or by email at enquiry@sprattfinancial.co.nz.

The official announcement of the acquisition from Fidelity.

More information about our services here.

Trauma Insurance - What You Need To Know

A recent article on Good Returns details recent changes by Insurance provider OnePath to their trauma cover.

The article also makes the statement that Trauma Insurance is becoming more popular among New Zealand consumers as a knowledge spreads through the populace that it is more likely to be claimed upon than life insurance.

"General manger of adviser distribution Jeremy Nicoll said it was a product that advisers should be discussing with their clients. “It does provide a good amount of money to help customers when they do have one of these conditions… Customers understand they are more likely to claim. Everyone has a friend who has contracted some form of cancer.”"

In short, for those who don't know, trauma insurance is a form of cover that pays out a lump sum to you if you suffer a critical illness. With the advances in medical technology, it is now highly likely that you will survive these conditions but will then be forced to undergo a period of recovery and rehabilitation where you will be unable to continue work and earn a living. Trauma insurance is thus designed to help you cope with illness and its effects on your family and your lifestyle.

Most providers will give you a full list of the conditions covered. Sovereign for instance, has 44 conditions that are covered, from the most common such as cancers, heart attacks or strokes to more rare conditions such as liver failure, lung disease, paralysis and neurological disorders. For a full list of Sovereign's covered illnesses and the conditions upon each, check out their Living Assurance PDF here.

There is a long list of conditions covered by trauma insurance. Make sure you know which ones are covered before you start and read all policy documents given thoroughly.

Trauma insurance is becoming more popular as the knowledge begins to sink in through first and second hand experience that in this day and age a quick death due to a sudden illness is more and more unlikely. The more likely scenario is a long period of recovery, but if you only have life insurance it will not pay out, leaving you in the lurch at your most stressful time.

With the statistics on critical illness in New Zealand the way they are, it's heartening to see Trauma cover becoming more popular, as it is important, perhaps these days equally as important as life cover (once considered the crucial form of insurance to have). Stay tuned for a future post on extra add on benefits you can add to your trauma cover to get even more out of it, and don't hesitate to ask if you have any questions!

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Notes from the Southern Cross Road Show 2013 (Part Two)

Recently one of our team attended the Southern Cross Health Insurance Roadshow. Here is part two of her experience from the event, and what the experts are saying about the current state of Southern Cross, health insurance in New Zealand, the private health care system and several forthcoming changes. For Part One, click here.

Southern Cross are going to try and implement an open contract strategy (currently being successfully practiced in the UK), which is open referral whereby members ring Southern Cross and they give a list of health care providers, this way there can be some restriction on the overpriced providers mentioned in part one as a drag on the New Zealand health insurance industry. The problem is that currently, the GP refers the patient to a specialist of their choice for whatever reason they choose. It could be that the GP thinks they are the best choice what they do, but it could also be that your GP plays golf with the neurosurgeon and he thinks he’s a great golf player. There is nothing in place in the current system to stop this from happening,. Southern Cross mentioned that unfortunately some of us can be passive and just go with what our GP says, no questions asked. How many of us actually research the specialist or ask for a portfolio? How many of us ring around for a second opinion? Also, as mentioned in Part One, people tend not to care about prohibitive costs when it is 100% covered by the insurer. They are somewhat unaware in this regard that if this problem of overcharging could be addressed, the insurance companies would have more room to lower premiums or offer more competitive rates, which would benefit them directly.

Southern Cross are implementing initiatives to counter overcharging and pass the savings on to the consumer.

In another forthcoming initiative, Southern Cross wants to gather patient information so that a Portfolio on specialists/surgeons can be available for members to actually read about the impending procedure from real people and real cases. This portfolio will divulge success and failure rates, return visits to hospital because procedures haven’t worked, infections caught whilst in hospital and all the relevant information that patients should have access to. This could save money, preventing procedures having to be repeated at Southern Cross' expense. When repeat procesures occur, it was detailed to us that getting the money returned to them involves the insurer battling ACC for medical misadventure as ACC doesn’t willingly pay over the money. Last year, Southern Cross got $6 million recuperated but this was not enough to cover the extra expenditures and costs associated with repeats of procedures.

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We were informed in the presentation by Lars Bojsen-Moller that Skin Claims have risen 33% from last year, totalling 47,000 skin claims and $40 million paid out. One of the reasons for this is that GPs aren’t doing what they could be doing.  They are sending the patients to a skin specialist at a cost of $1500 when in some cases the doctors are very capable and more than qualified to carry out the same procedure for $400. When this happens many times it leads to a huge increase in costs which Southern Cross has to pay in claims.

Lars concluded his presentation with a point aiming to make us aware that some health insurance companies don’t word their policies correctly. You can think that you are covered for something but end up not being covered. This is something that clients who go it alone with their insurance have to be aware of and practise extra diligence, or use a broker such as ourselves who have the knowledge to avoid these possible pitfalls and get you just what you need. Wrapping up his presentation, Lars reminded us that Southern Cross have a lot of changes coming up, which hopefully should benefit their ability to give clients better deals on their health insurance and better care. We will keep you informed when these changes come into effect and how they might benefit your personal insurance. As always, if you have an enquiry or you want more information, send us a question at enquiry@sprattfinancial.co.nz or by phone at (09) 307 8200.

Visit our official website for more information.

Visit the official Southern Cross website.

Notes from the Southern Cross Road Show 2013 (Part One)

Recently one of our team attended the Southern Cross Health Insurance Roadshow. Here is her experience from the event, and what the experts are saying about the current state of Southern Cross, health insurance in New Zealand, the private health care system and several forthcoming changes.

Lars Bojsen-Moller (Chief Operating Officer - Marketing and Distribution) took to the floor first up, a really interesting, knowledgeable man, who has been around the world several times comparing the world's public health and health insurance systems. I have broken down as best as I can his hour long presentation.

·         Southern Cross has 61% of the NZ market share.

·         Grew by only .08% last year.

·         Processing 2000 claims a day at $2.8 million.

·          Southern Cross has had an A+ Claim rate for 9 years in a row.

·         Southern Cross had 12% fewer cancellations last year.

·         They have the biggest Adviser Group and were happy to report that Group Schemes were on the rise.

However, on the negative side:

Unfortunately, NZ Health Insurance overall is in decline and has been for the past 3-4 years. This is a direct result of people’s disposable income being increasingly under pressure and the amount of redundancy increases. Also, confidence in Insurance Companies is at an all time low across the board.

Lack of disposable income among Kiwis is hurting the Health Insurance Industry.

Lars spoke with much passion and at great length about a significant problem we are having with specialists/surgeons overcharging and the perception from members and the public that the more the surgeons/specialists charge, the more it must mean they are “the best”. From the statistics, this is not entirely the case. Private practitioners have made sure they have greater demand than supply and have been able to apply this for a long time, by setting their price structure high, and this is not about to change in the foreseeable future. I guess what this means for Southern Cross and the Health Insurance industry is they are being effectively caught in the middle of paying too much and keeping up with meeting member expectations. This will take a long time to remedy, the surgeons and specialists are happy, very happy actually, and the members don’t care about cost as long as they can claim 100% of their procedure, Southern Cross unfortunately are left paying as necessary for procedures that are boosted in price by surgeons and private health care providers. You can understand Southern Cross’s frustration.

The cost being charged by private surgeons is doing damage to the health insurance business, according to Lars Bojsen-Moller.

A recent survey showed most Aucklanders refused to receive private treatment outside of Auckland. North Shore people refused to even receive treatment over the Harbour Bridge. Auckland is by far the most expensive city in NZ for any private procedure and that’s because quite simply, they just can be. For example:  A knee replacement would cost $17,990 in Marlborough and a whooping $26,029 for the exact same procedure in Auckland. The interesting fact is that if anything was to go wrong in Private Surgery/Hospital you end up in the Public hospital!

A lot of Auckland Private surgeons/specialist aren’t willing to contract with Southern Cross, they are price setting and getting away with it. However Southern Cross has contracts with some affiliated providers and this is when you swipe your card and the specialist involved sorts out your prior approval etc which has been the case for quite sometime and which they are hoping to spread further throughout the health care system. If this goes the way Southern Cross wants it to, they believe it will end up helping the public and make a positive impact on mitigating the stresses involved with health insurance prior approvals.

In the next part: We'll see what other initiatives and changes Southern Cross are looking at implementing, some statistics on claims, and how these changes will affect you as insurance clients.

Visit our official website for more information.

Visit the official Southern Cross website.

Why use an Insurance Broker?

In a self reliant, DIY sort of country as New Zealand, people can wonder why they would need the services of an insurance broker to secure their insurance instead of just going it alone. There are options available that do seem quick and easy, such as buying direct from a bank or straight from one of the big insurers. Why would you need to add someone else to this process when you can just do it all yourself?

Unfortunately, with insurance, going it alone is akin to throwing darts at a target blindfolded. If you hit the bullseye, you just got very lucky! An insurance broker is like a professional darts player, standing beside you when you can't see, with a full view of the target and all the skills necessary to get it there.

Insurance - a lot of things to consider for those who go it alone.

Firstly, everybody is different and everyone requires different things from their insurance. For some, cost is the primary factor, whilst some want the highest sum assured possible, the shortest waiting period or the most reliable cover that they know they'll be able to claim on when the time comes. Some need the best deal for a group medical plan for their family, whilst some need to insure their business and its key staff. Each of these desires requires a thorough search of the marketplace to find the best source that can fulfill those unique requirements. Most people end up settling for poor options that don't fully cover them or they end up paying more than they have to.

A broker is a professional with a unique knowledge of the marketplace and connections within the insurance industry that let them know the best options for you. They also have working relationships with the major insurance providers which lets them get deals for you that you won't be able to get yourself. If you have a broker going to work for you, your insurance could be a cost effective Ferrari instead of an over priced clunker.

Do you want your insurance to perform like this?

Or like this? 

Better yet, if you're dealing with a really good broker, you get an even broader range of service at your disposal. Not only will the broker and their admin team deal with securing you the best insurance deals, they'll also be on hand to manage your insurance, answer your questions and stay on the lookout as to whether better deals come available for you on the marketplace. The broker and their team will also personally manage your claims, taking most of the burden of forms and paperwork out of your hands during your most stressful times.

We hope you consider using a broker when you decide you need insurance. Trust us, it makes everything a lot easier!

Meet our team of brokers.

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Defining Insurance Terms

A lot of the jargon and terminology surrounding insurance can be difficult for people not familiar with the industry to understand. Worse, many insurance companies or brokers use these terms expecting full knowledge. Here is the definition of some of the most important terms you might come across when dealing with insurance.

1. Policy 

An insurance policy is a contract between yourself and the insurer. The policy provides conditions that once you fulfill, you will receive payment from the insurer in the amount agreed to when the policy is taken out. For example, a life insurance policy is an agreement between you and the insurer to pay a certain amount (called the sum assured) in the event of death. A Total Permanent Disablement Policy will provide payment once you fulfill the conditions of being unable to work due to illness or disablement for longer than a specified period of time. And so on and so forth. An insurance policy is what you pay premiums for as well as what you make a claim upon.

2. Premiums 

The price you pay to keep a policy in force. Most premiums are paid monthly, and the amount depends upon the type of insurance, the sum assured and other factors such as your age, your health or the amount of people covered by the policy.

3. Claims 

A claim is the action you take when you have fulfilled the conditions of your policy and wish to be paid out the sum assured.

4. Pre-Existing Conditions 

A pre-existing condition is a physical health or mental health condition which were already present at the time of taking out the policy. Pre-existing conditions can be excluded from your insurance coverage or can cause your premiums to be higher, as the insurance company is taking on a higher risk by insuring you.

5. Exclusions

Events or conditions that are not covered by your insurance policy. For example, in many life insurance policies there is a suicide exclusions whereby death by suicide will not result in the insurance paying out ie. it is 'excluded' from your cover.

6. Insurance Broker

An insurance broker is different from an insurance company in that a broker does not sell insurance to you directly. A broker searches the marketplace on your behalf, taking your needs and your individual circumstances into account to secure the best possible deals on the insurance policies you are looking to take out. A broker's job is to work for the client and work for their interests and not the interests of the insurance companies. Our company, Spratt Financial Services is a team of insurance brokers, operating under this definition.

7. Waiting Period 

The waiting period is the amount of time (agreed upon at the time of taking out the policy) which must pass after an event before you can collect your insurance benefit. For example, in an income protection policy with a waiting period of 4 weeks would mean that you will receive your agreed upon benefit from the policy 4 weeks after being rendered unable to work by illness or disability.

8. Living Benefits 

This is a feature that can be included in life insurance policies that allows you to receive payment on your life insurance before you die under certain circumstances. Usually, these involve diagnosis of terminal illness such as cancer or the need for specialised care.

9. Waiver of Premium

A feature that can be added to an insurance policy that will ensure that your insurance remains in place and active if you fail to make premium payments due to illness or disability. The waiver of premium will usually remain in effect for as long as you are disabled and unable to make premium payments. This feature will cost an additional premium.

10. Qualifying Event

An occurrence that triggers your insurance payout or claim. For instance, a death in the case of life insurance or a surgical procedure in medical insurance.

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Contact us if you have any questions about your insurance.

Why Insurance Matters For Families.

A family unit tends to be just that. A single unit, with many individuals functioning (more or less harmoniously!) as one. Like in a small business, each person fulfills a vital role that the unit can't continue to operate without. Breadwinners go out, work and provide for the family financially, while others contribute to the household, go to school, contribute to the community or help each other out.

Next, let's think about an individual, living alone, providing for his/her own needs single-handedly with no one to take care of but themselves. Most of us are at least a little familiar with the risks of death, critical illness or disability happening to one person. If not, you can read some statistics on critical illness here. When one person is all there is to worry about, for women are facing a one in seven chance of critical illness between the ages of 30 and 60 and for men the chances are one in five (I guess women are more resilient after all!). Protecting yourself against these odds would seem like a worthwhile proposition for most even in this situation. People buy Lotto tickets every week with a one in 100,000 chance of a first division win and think its inevitable it'll happen to them one day, when the chances of a disabling illness are unfortunately hugely more likely!

Critical Illness - Unfortunately much more likely than Lotto.

Unfortunately, for families the situation is even worse. A family is a singular unit that relies on all of its members being healthy and productive for the sake of the group. If both parents for instance are working and require an income to support the family, the chances of one of the pair suffering a critical illness by the age of 60 is an unfortunate one in three. If your family or business relies on three or more incomes, the odds shoot up even further, on to and above 50%. In other words, if you're in a group that relies on the income of 3 or more members, you've got a one in two chance of having one of those members disabled by illness and unable to earn for a protracted period of time, during which regular savings may be insufficient to cover the costs of living and treatment.

So what solutions can insurance provide for families, groups or businesses?  A group medical scheme for instance can be tailored to protect a whole family, paying for any medical expenses that any of its members may need. This option can be cheaper than insuring each family member individually if the right insurer is chosen. Life, trauma and total permanent disablement insurance, through altering the policy ownership details (read more on this here), can be designed to immediately payout to the other members of the group, covering your expenses and creating an artificial income to support you and the rest of the group.

Visit our official website for more information.

Critical Illness Statistics.

How to make sure your policy payouts get into the right hands quickly.

Superannuation: New Transtasman Portability

Recently, it has become possible for any superannuation fund in Australia to be transferred across the Tasman into your New Zealand Kiwisaver fund.

If you have at any time lived or worked in Australia and had any of your income transferred into an Australian super fund, you can now bring your fund across. Also, if you have done business with a financial adviser across the Tasman and lost contact upon your return to New Zealand, your super fund doesn't have to be lingering in financial limbo anymore. Just get in contact with us and we’d be happy to assist with all aspects of the transfer. The only limitation on this Trans Tasman portability is that your former Australian super fund must be converted into Kiwisaver.

Now you can transfer your Australian superannuation fund into a Kiwisaver account.

"A recent change in Australian legislation means that from July 2013, New Zealand residents will be able to transfer their eligible Australian superannuation savings into their ASB KiwiSaver Scheme account. Members who permanently emigrate to Australia will also be able to transfer their KiwiSaver savings to an Australian complying superannuation fund that accepts the transfer.

If your Australian funds are transferred into your KiwiSaver account, they will be subject to KiwiSaver rules and regulations; however some Australian superannuation rules will still apply.

You will be able to withdraw the Australian-sourced portion of your KiwiSaver account at 60 years of age, if you fulfill the Australian definition of "retired".

Transfers of Australian superannuation funds to your KiwiSaver account will not be considered eligible contributions for the purpose of receiving any member tax credits." 

- ASB Official Superannuation Transfer Information

If you are unsure of whether or not you may have money sitting in an Australian fund somewhere, we can help you with that too. Finally, although the ability to transfer your superannuation from Australia is a new feature, transferring your pensions from the UK is also possible for those who have previously made residence there. If you need any more information, just let us know, and don't leave your funds in limbo overseas when they could be benefiting you here and now!

How to contact us.

Our investment specialist, Ross Wallace (AFA).

  

The Benefits of Total Permanent Disablement Insurance

This is our second post dealing with Total Permanent Disablement Cover (TPD), the first of which, a basic introduction to what the cover is, the definition of accelerated and stand alone policies and what constitutes permanent disability can be found here.

When looking at different forms of insurance, they each tend to have their own unique benefits and drawbacks. Life insurance is widespread and important, yet only pays claims upon actual or medical death, rendering it unable to cover critical illness and disablement that takes you out of your work and makes you unable to earn money. Income protection does this job but sometimes involves more costly premiums. Health insurance will cover your medical treatments and expenses but will not supplement any lost income your medical conditions could cause.

When people learn about TPD, they typically wonder if its really necessary or beneficial. What does it offer? Is it worthwhile to have, even if I already have life cover and/or income protection? What differentiates it from other forms of risk cover? What are the benefits and drawbacks to this lesser known form of insurance?

A common response would be that a drawback to TPD is the unlikelihood of suffering a condition that would result in you meeting the necessary conditions to make a claim (described in more detail here). To some extent, this is true. It is less likely that you will ever need to claim on TPD than income protection or health insurance. However, it is not rare enough that the possibility can be readily dismissed out of hand. From the calendar year spanning July 2011 to July 2012, Sovereign paid out over $2.5 million of TPD claims, the highest proportion being for Neurological conditions and Cancer. So, it does happen and it may be worth having. At Spratt Financial, we have personally seen a few TPD claims over the years for substantial amounts, in one case over a million dollars, which formed an income source sufficient to provide for the rest of the client's life.

Also, the more infrequent nature of Total Disability is taken into account in the cost of the insurance, making it an even more worthwhile proposition. Because conditions resulting in permanent disability are rarer, TPD cover can be taken out for a far cheaper cost than other forms of insurance, and the monthly premiums are typically very affordable. Our company founder believes strongly in TPD insurance due to his overseeing of several cases and tries to encourage our clients to take it out wherever possible, as it is very seldom a financial burden and could result in hundreds of thousands of dollars being paid in your moments of direst need.

Overall, even though TPD is a more overlooked and unknown form of cover, it actually has less drawbacks than some of the more popular forms of insurance. It can be useful, it can completely remove your financial worries for life if disablement does strike and it is generally not overly costly. We personally think TPD insurance is generally a good thing to have, and if you agree, we can definitely help you out. Don't hesitate to drop us a line at enquiry@sprattfinancial.co.nz if you have any questions.

Read our first post on TPD.

Visit our official website for more information.