Insurance Advice: Life Policy Ownership - How to Save You Stress at Claim Time

Someone you love passing away is perhaps the greatest struggle and pain that a human being can endure in this life. Unfortunately, the pain of losing a loved one can't be abated, but in our experience dealing with life insurance claims for people who have passed on, there are things people can be unaware of regarding life insurance which can lead to a prolonged and stressful claim process, leaving families waiting and stressed out in their already difficult time. This article is designed to educate, to make sure that you and your loved ones make things easier on your life insurance beneficiaries when you pass on. This can be done through adjusting policy ownership details.

To make it clearer, let me give you two examples.

John Smith has a life insurance policy, in the amount of $250,000. He is listed on the policy as the sole policy owner. When he passes on, the claims process begins. Unfortunately, the life insurance company is forced to wait for the executors of John's estate to have the will probated through the courts to determine John's desired beneficiaries and pay out the $250,000 to them. This process could take upwards of 2-3 months. Even worse, if John has no will at the time of his death, an even more complicated process ensues that will drag on even longer and could even, in the worst case scenario, see his policy benefit people he did not intend for it to!

In the second scenario, John Smith has the same life insurance policy ($250,000). In this case though, John had determined that he wished his wafe Stacey to be his beneficiary in the event of his death. In this interest, he had his wife registered as an additional policy owner. When John passed away, the insurance company immediately knew the intended beneficiary and was able to pay out within days to his wife Stacey. This avoided the lengthy probation process entirely. All it took was the consent of both John and Stacey and their signatures. The ownership details, in terms of the insurance claim, supercedes anything put into the will, allowing a quick and easy transfer of the $250,000 to his wife, supporting his family in the most quick and easy manner possible in their hardest time.

If you have life insurance and you want to make things as easy as possible, think seriously about including your intended beneficiary as a policy owner. This will ensure that in the event of your death, months of wrangling and procedures are circumvented and the money gets into the intended hands from the insurer. We have heard some real horror stories in our time, of entire estates falling into the wrong hands or families forced to give up their lifestyle due to being forced to go too long without their insurance claim after the death of the family breadwinner. We hope that knowing this helps, and as always, if you have any questions about this process or would like to know more, we're available anytime.

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Sunday Star Times: Controversy over Higher Life Premiums for Depression

Today on the front page of the Sunday Star Times (June 23rd 2013 edition), the publication is featuring an article by Kirsty Johnson, detailing the plight of TV presenter Sonia Gray, who sadly struggled with post natal depression, battling her way out of her condition to find that she would then have to face higher life insurance premiums for having her psychological condition.

"I was shocked," she said. "A lot of people have mental health issues around pregnancy. It's often hormonal," she said. "The insurer's reaction was bizarre."

Sonia Gray, TV Presenter and Mother.

This has given rise to a great deal of understandable reaction from both the public, the insurance industry and mental health professionals. Most people understand that it is a fact of life that insurers are private entities, and attempting to secure insurance when health is faltering with ailments, disabilities or long term health conditions will result in higher costs or refusal, in the interest of both the insurer and other clients who would lose their cover and security if the insurer was forced out of the marketplace due to excessive claim costs. However, mental health and depression is a much different entity to physical health problems and disablement.

"Dr Sara Weeks, a maternal psychiatrist... said about 16 percent of New Zealand women were believed to suffer some kind of pregnancy depression... Auckland University senior lecturer in mental health nursing, Anthony O'Brien, feared the policy could lead to complicated diagnoses as doctors tried to avoid using the 'depression' term". 

Mental Health conditions are a very complicated issue, which a panoply of treatments and divisions within the psychology profession on how to approach, understand and treat ailments such as depression. Whilst this is the case, a perception of an across the board policy forcing depression sufferers to pay more will understandably lead only to backlash against the insurance industry, feeding into images of money grubbing ahead of humanity. From our experience of dealing with the insurers directly, this is not fully the case. Whilst it is true that insurers do load policies due to depression, this is mostly in the case of severe depression and the client's personal circumstances are looked at in each case before a decision is made.

Even so, this case demonstrates that sometimes the insurers can get it wrong. The insurers obviously must have a constant and consistent balance between maximising profitability to continue to provide a service that is no doubt valuable and worthwhile to the New Zealand public, whilst having compassion and human interest at heart, and in this instance, perhaps they have been erred too much towards the former. People should be given the benefit of the doubt, and in the absence of conclusive evidence of higher risk, it is unfair to burden them further with policy loading.

What are your views on this controversial issue? Should mental health conditions be treated similarly to physical ones by the insurance industry? Is there really more of a risk of death for post natal depression sufferers, and should this be taken into account? Most importantly, what more can be done to combat the problem of mental health in New Zealand and aid the sufferers of depression, and should the insurance industry have a role to play, however small, in this regard?

Read the original article by Kirsty Johnson, courtesy of Stuff.co.nz.

More information and help for sufferers of depression.  

Feel free to ask us about depression and how it might be affecting your insurance.

Key Person Insurance Cover

Key Person Insurance is a form of risk insurance that is designed to help out your business if one of your key employees is rendered unable to work due to health issues or disability. This type of insurance cover can be useful for businesses who rely or depend on one or more key employees to maintain profitability. For instance, in our case study of Justin and ABC Engineering, Justin held a key position within the business, with a large proportion of the company's monthly income attributable to his relationships with clients. If you have key person cover, the devastating loss of someone like Justin to illness or disability can be mitigated by a monthly benefit to the business, designed to cover the loss of income your insured employee would have brought you.

Is Key Person Cover Useful?

ACC Research, conducted in June 2006, revealed that a huge 67% of small or medium business closures in New Zealand are due to the injury or disablement of a key person or employee. The same study showed that only 8% of business closures in comparison were caused by the fact that the business became unprofitable or no longer viable, showing that by far, injury or illness is the biggest risk to small business in New Zealand.

Furthermore, we have previously discussed the statistics regarding critical illness in New Zealand, which are applicable here too. 51% of males and 33% of females will suffer a critical illness before the age of 70, and if or when it happens to one of your businesses critical personnel, having an assured monthly flow of income to cover it can help your business survive, recover and prosper again.

How does it work?

- When the cover is taken out, the amount that is paid to you monthly in the event of your employee being rendered unable to work is agreed to, so that you will know specifically the level of benefit you will receive. This amount is of course, negotiable and it can be set based on your personal needs.

- The benefit itself is typically payable for a maximum period of two years.

- It is possible to lower the monthly insurance premium you will pay for your Key Person Insurance Cover by adjusting the length of time you have to wait after your employee is incapacitated before your payment kicks in. The longer period of time this is, the lower your monthly premium will be.

What other features can Key Person Cover Offer?

- Recurrent Disability Allowance: If the key person or employee covered suffers a relapse of the same condition within 6 months, your wait period can be waived so the benefit kicks back in immediately where it left off without a further wait period needed.

- Additional Payment in Case of Death: If the key person or employee covered sadly passes away while you are receiving your monthly key person insurance payment, your business can receive an additional payment of 6 times the monthly benefit to help you cope with the tragic circumstances.

- Changes can be made at anytime to reflect your current needs, and your insurance cover, waiting periods, amount of employees covered can be reviewed and changed at anytime, giving your cover flexibility as your business changes.

If you need more information, have any questions or you would like to get your businesses employees covered, post a comment below or contact us at enquiry@sprattfinancial.co.nz.

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Avoiding the pitfalls of Kiwisaver.

I came across this article online when browsing. It's a very interesting look at the double edged sword of managing your Kiwisaver without professional advice, and the attitudes of everyday Kiwis towards Kiwisaver.


Original Article by Susan Edmunds Here

"Massey University's Claire Matthews is speaking at today’s New Zealand Capital Markets Symposium, at AUT, about her paper on KiwiSaver member behaviour, which looked at what drives people to choose certain funds over others. She said some of the research results were surprising.

Previous studies have shown that savers opted for bank funds because they could see their KiwiSaver balances online. But Matthews’ study said it also seemed to prompt people to move away from banks. “It’s odd. We’re speculating that it’s because they are able to check the balance, they can see when there is a downturn, they’re not happy and go somewhere else. It’s not a very good way of managing your KiwiSaver.”

She said it might be a sign of KiwiSavers’ inexperience. “It will be interesting to see whether that continues or whether it changes as people become more used to KiwiSaver and seeing ups and downs.”

Providers’ fees were having a significant effect on which funds KiwiSavers chose to put their money in, Matthews said. But she said it was unclear whether they completely understood them. “People are going to be looking at the fees, whether they’re making good comparisons or not is unclear…. Sometimes you pay higher fees for higher returns.”

Matthews said savers were definitely not getting enough advice. “KiwiSavers are disadvantaged because they are making decisions that are long-term and have the potential to have significant impact on their retirement lifestyles but they are unable to access the advice they need to ensure they are making the right decisions.”

As we can see, there are many aspects to consider with Kiwisaver, some becoming fairly complex. When faced with the challenges of going it alone with Kiwisaver, people can understandably make spur of the moment decisions that could affect their long term financial future. Kiwisaver is designed to be a long term savings programme, and previous research has demonstrated that not enough has been done to help Kiwis understand the aspects they need to know to get the most out of the programme. One previous study for instance, has shown that over 30% of Kiwis get their Kiwisaver advice from their own family or friends.

Kiwisaver can be a great long term boon to your future in retirement, and that's why we're here to help with professional Kiwisaver advice. Our Investment Specialist Ross Wallace offers market leading experience with Kiwisaver and can simply and effectively help you make the best decisions for your Kiwisaver needs, taking your unique financial circumstances into account. He can bring clarity to a lot of the confusing issues surrounding Kiwisaver and help you get the most out of it.

Don't hesitate to ask us your Kiwisaver questions below, or at enquiry@sprattfinancial.co.nz.

The official site of Kiwisaver.

Our official Investments Page. 

Ross Wallace's Profile and Contact Details.

Funny Insurance Ad Video

When things go wrong, they go very wrong... ;)

Placing Your Southern Cross Health Insurance On Hold While Overseas

From conversing with a lot of our clients, we have found that many of them are unaware that it if you are leaving New Zealand for a protracted period of time (up to 12 months), you do not have to cancel your Southern Cross Health Insurance Policy. You can instead place your policy on hold, to be resumed when you arrive back in the country, saving yourself considerable time and stress in cancelling and reestablishing your health insurance. Also, if you have to cancel your insurance, you will also lose cover for any pre-existing conditions you may have when you are re-insured, giving a good impetus to put your policy on hold rather than cancelling it altogether.

Here is all the information, terms and conditions from the Southern Cross Health Society.

"You can only place your policy on hold if you are travelling overseas,

You must have completed one year's continuous membership since the date you joined Southern Cross or since the end of your last on hold period.

You must place your policy on hold before leaving New Zealand.

You must pay premiums up to the date you leave New Zealand.

You can only place a policy on hold three times per policy lifetime.

Two months is the minimum on hold period for a policy.

12 months is the maximum time a policy may be placed on hold for.

Reinstating your policy.
If you return to New Zealand within two months, your policy will be reinstated from the date it was placed on hold. Premiums will then be due for the time you have been away.

If you return to New Zealand within 12 months, you need to contact us within 30 days of returning to New Zealand. You will need to provide documentation showing your dates of departure and arrival.

If you are away longer than a year, you need to contact us within 30 days of your 12 month on hold period to reinstate your health insurance. You will need to provide documentation showing your date of departure.

Premium payments will start again once your policy has been reinstated.

If you don't make contact you may have to rejoin Southern Cross as a new member. This means any pre-existing conditions won't be covered and your current plan type may not be available."

If you have any further questions about placing your policy on hold or about insurance in general, contact enquiry@sprattfinancial.co.nz for more information.

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Is Your Current Insurance Sufficient?

After 20 years working in the Insurance industry, there is one thing about insurance of which we am absolutely convinced. Insurance works best when it is used as the funding for a plan that will protect a business, family or estate that is confronted by the disablement process. If you already have an insurance package and you want to know whether your insurance package will really be sufficient for your needs, here are the questions you should know the answers to:

What Will You Need The Cover For?

Specifically, use a pen and paper and write down what the claim proceeds will be used for when they are paid out. If you can't do this now before tragedy strikes then you may be facing trouble later.

Will You Be Able To Claim Soon Enough?

Death cover pays out in the event of actual or impending "medical death". However, we know that 94% of all deaths are due to medical conditions not accidents and 65% are due to degenerative medical conditions such as cancers, heart disease and strokes which can kill slowly over what may be an extended period of time. During this time, unable to work and unable to support yourself, your family or your business, you will be facing tremendous financial strain which your insurance may not cover for. Will the bank or your creditors wait until you are terminally ill before your death cover pays out? This is perhaps the most crucial consideration to take into account when assessing your insurance. We can help you ensure that you are fully covered financially in the face of these worrying statistics as unfortunately, basic life cover is most of the time, simply not sufficient.
 

Is It Enough Of A Claim?

It may sound strange, but a $250,000 insurance claim may not be enough to repay a $250,000 mortgage even assuming you want to repay all of it. You may have additional interest payments, penalties for being in arrears and you may need to pay a Solicitor, Trustee or your Accountant to carry out these transactions for you.

Do You Have The Right Insurance?

This applies to the type of income protection policy you may or may not have, what your health insurance actually covers or the way that permanent disability or critical illness components are structured within the overall portfolio of insurance. These two components may or may not reduce the remaining life cover once they have paid out which could create major problems at the very end of the disablement process.

Even assuming that you or someone close to you will be physically, mentally and emotionally capable of applying the claim proceeds to the predetermined targets is not supported by our experience of dealing with over 160 claims.

What is the best way of answering these questions fully? Use our experienced professional advisers to not only design and review the underlying plan, but to execute it and carry out the tasks they are best suited to handle. If you don't have a plan now, prepared with clear-headed purpose, then any insurance you do have may well be insufficient or not adequately fit to your unique needs. Use our experienced professionals if you need guidance or advice.

For more information on how our team of advisors can assist with managing your insurance program, contact us by calling 09 307 8200 or by email at enquiry@sprattfinancial.co.nz.

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Building a plan to protect your business and estate.

If you are the owner of an estate or you manage a business, have you ever thought about what would happen should a tragic and unforeseen deterioration of your health occurs? As insurance professionals, we have seen it happen all too often. As a result of our experience, the number one piece of advice we could give to home or business owners is to put in place a plan using insurance resources. A well worked and comprehensive insurance plan can re-establish control of your finances, leave your estate in your own hands and restore financial balance for you and your family.
Once something goes seriously wrong with your health, well-being and current financial situation, you should look to achieve the following goals in the face of what may well be your most overwhelming adversity: 

• To have the greatest possible access to medical advice, treatment and technology so that you can get yourself well, back on your feet and hopefully limit the effect of the disablement process on your career, income, lifestyle and dependents;
• To be able to control debt as soon into the disablement process as possible. To eliminate or significant reduce outstanding debts and financial obligations.
• To create a certain source of income that will fund your lifestyle and keep your house and/or your business in your hands.

We can attest to just how difficult this has been for many people who have "gone it alone", mistakenly thinking and backing themselves to carry out many of these tasks and functions after their health has come apart at the seams without the necessary insurance. If you are so sick that you can't actually carry out the many vital roles and functions that still need to be carried out within your business, family and estate, then failure, and devastating failure at that, awaits the unwary and unprepared.
 
Our clear and certain belief is that insurance works best when it is used as the basis for a plan that is intended to protect a business, a family or an estate when tragic deterioration of an individual's health occurs. The three goals listed above can be accomplished by having the right type of insurance in place, customised and personalised to your unique situation.  As insurance professionals, we can help you build the right plan for your unique situation and life circumstances. Our capable team does this everyday and have the soundest professional processes in place. Your personal plan should contain the answer to four questions:

• What needs to be protected?
• Who is to do it?
• What authority do they need to act for you?
• Where does the funding that you will need come from?

We can help give you answers to all of these questions. With the right insurance, the funds you require in your time of need will be taken care of. We can help source the best and most competitive insurance on the market from the most reputable sources. Use our skilled and experienced professionals, construct a plan and shield against the risk of losing your most important assets.

If you need help with your plan to protect your business and estate, don't hesitate to contact us at enquiry@sprattfinancial.co.nz or by calling (09) 307 8200.

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Read more about the sobering statistics of critical illness in New Zealand.

New Zealand's Unique Investment Advantages

As New Zealanders, we should wake up each morning thankful to live in such a beautiful country. Our scenic wonders are unmatched and we are internationally regarded as a prime and sought after tourist destination. However, our environment and our people aren't all we have to offer. New Zealand also offers unique advantages in business, and our investment environment is safe and prosperous. This article will investigate why New Zealand is a great place for your investments.

Key Awards and Statistics

An under reported fact is that New Zealand has recently ranked first in the world in three investment categories:

1. Protecting Investors (World Bank Doing Business Report 2013)
2. Starting a Business (World Bank Doing Business Report 2013)
3. Lack of Corruption (Transparency International Corruption Index 2012)

Anti corruption agency Transparency International continues to rank New Zealand as Number One for honesty and integrity in its public sector, having now achieved this status for seven consecutive years. Thus, New Zealand offers an unmatched record of safety for your investments that currently no other country can match.

Our economy is in a stronger position than many western economies, having weathered the brunt of the world economic crisis and emerged in a healthier state when compared to states in the European Union and the USA. Whilst no economy can be said to be invulnerable, we are relatively isolated from the travails in Europe and the US and have strong ties to emerging and thriving economies in Asia.

We boast a wide range of free trade agreements with other nations, a simple tax code (the third lowest in the OECD in terms of time taken for taxpayers to comply with tax obligations, December 2010) and an absence of import tariffs or Government subsidies, facilitating both domestic and foreign investment.

List of Nations New Zealand has Free Trade Agreements With:

- China
- Australia
- Vietnam
- Phillipines
- Cambodia
- Brunei
- Indonesia
- Hong Kong
- Myanmar
- Thailand
- Malaysia
- Laos
- Singapore
- Chile

Negotiations are also under way with India, Korea, Russia, Belarus and Kazakhstan, and New Zealand is a key driver behind the Trans Pacific Partnership.

A 'Can Do' Culture

If you need an environment that fosters success, banishes negativity and finds innovative solutions all built upon a foundation of entrepreneurship, dedication and hard work, New Zealand is the place. As a smaller nation of less than 5 million people, New Zealand achieves big on the world stage even with fewer resources than its chief competitors. This is a testament to the attitude of the New Zealand people and the positive business environment they have cultivated, in which more is made from less and we seldom take no for an answer!

Esteemed Position and Strong Currency

Finally, New Zealand is among the top 20 rated sovereign nations in the world. Standard and Poors gives New Zealand an AA+ Local Currency Rating, an AA foreign currency rating and an AAA T&C assessment. Furthermore, the New Zealand dollar is trading very strongly against the $US the Pound Sterling and the Euro, meaning that making New Zealand dollars through investments will go a long way in the international marketplace.

Source Credit: http://www.nzte.govt.nz/en/invest/new-zealands-investment-advantage/

If you are interested in making investments and taking advantage of our country's unique advantages, email Ross Wallace (Authorised Financial Adviser) at ross@spratt.co.nz.

Find out more about our investment services.

Ross Wallace (AFA) profile.

Highest health insurance payouts 2012.

"Southern Cross' biggest health insurance payout last year was for a spinal surgery costing $160,000, its latest statistics reveal.

Another spinal surgery cost $151,000 and $100,000 was paid out for a larynx removal.

Cancer, heart disease and spinal conditions were the causes of the highest health insurance claims paid by the association.

All of the patients who made the top 10 highest claims were aged over 64. The oldest was 76.

Chief executive Peter Tynan said it demonstrated the value of insurance. “No one wants to be ill but, if the unexpected happens and you need timely access to treatment, it can be very comforting to have the financial aspect taken care of.”

Those aged under 30 put in a high number of claims for tonsillectomies and dental procedures, for women aged 20-39 endometriosis surgery was common and for people over 50, hip and knee replacements, cataract extraction and skin lesion removals were in high demand.

Tynan said: “If they choose to self-insure, people should have realistic expectations of what they’ll need.”

A survey carried out by Southern Cross last year revealed that 79% of New Zealanders thought they would have to pay for some of their elective healthcare in retirement. But only one in five had started saving and many thought that savings of less than $10,000 would be sufficient."

Original Article Here.

It's always interesting to get a look at figures such as these. Imagine the burden of having to take on those kind of costs by yourself after retirement. The point about self insurance is interesting too, and it plays into a point I have discussed at other times on this blog. New Zealander's sometimes can lack perspective on just how prohibitive illness can be. This is due to a combination of factors, such as inadequate proliferation of the statistics and case studies involved, as well as a strong, independent, yet sometimes wrong headed 'she'll be right' sort of attitude. This attitude has seen Kiwis take on and achieve incredible feats, but it doesn't work so well when applied to your health, your ability to earn and protecting your family or your business from very real risks.

We certainly hope these risks are taken into account and that some of these figures demonstrate that savings of less than $10,000 certainly won't be enough if serious illness rears its ugly head.

Talk to us today about your insurance needs.