Life insurance – boring!

Life insurance.

Two words that are guaranteed to put you to sleep. It is a product that no-one wants, but most people need. I have a different view. If you are educated about what you are paying for and given clear, professional, unbiased advice, then surely life insurance just becomes another part of your financial plan, albeit one that you never want to use. We insure our houses, but I guarantee you that no-one wants their house to burn down.Read More

Income Protection: Bitter pill?

I don’t normally write about insurance, as I am not an expert.Coins gold

BUT, what I do know is that a person’s ability to earn a dollar is their biggest asset.

You are never too young to think about it either, I met a man whose girlfriend is in her 20’s facing cancer, the kind that has ability to create a huge loss.

You are can be too old, but not until you reach retirement, or a at point where you can support yourself even if you couldn’t work again.

Income Protection insurance is one of the ways that you can protect your biggest asset, and there are other ways that complement it, which will be explained by an insurance adviser when asked.

The biggest complaint I hear about income protection, and actually personal insurance in general is the cost.  Overseas i.e. not in New Zealand, there is a lot less protection for the individual provided by the Government, the USA is a good example of this, and they take for granted the need for personal insurance.  Here it is a different story, between ACC and WINZ we have a lot more cover than most countries.

If you value your way of life, the amount of disposable income you have, income protection is worth a look, it will be another cost to living, but what is worst, living without your income, or sacrificing a little in the meantime…

Finding a good insurance adviser can be a tough ask,  so here are some questions to ask:

  1. What sort of authority do you have to provide me with insurance?
  2. Can you provide me with options from more than one insurance provider?
  3. Are you going to give me balanced advice with options?
  4. How do you earn money from me and do you get paid year after year even if you don’t contact me for a review?
  5. Can I have your Disclosure Statement?

These are just a start, but a good adviser will let you know the answers to these and other questions when you meet, happily and willingly.  If you think you are not being listened to, try somewhere else. You need to be able to trust them, if you can’t the relationship won’t work.

If you want to check the details of the insurance/financial/investment adviser you can check them out on the Government website: www.fspr.govt.nz or check out the Financial Markets Authority website www.fma.govt.nz.

Five Questions to ask a Financial Adviser

I wrote this some time ago to help people new to using a financial adviser.  It can be daunting to talk to someone about your money that you do not know, so take the time to ask the basics first before discussing your situation.

1. Can I read both of your Disclosure Statements please?

2. What does your level of qualification mean and what type of authorisation to work does that give you?

3. This is my situation, do you think you can help me?

4. How will you charge me? Are the different services charged differently? Are there any ongoing charges?

5. Why do you think you are the best person to help me?

After this, if you don’t feel comfortable it may be time to try someone else.  Your financial adviser needs to know everything about you and if you don’t feel comfortable with them it will be hard to share the information and you won’t get the best from their service.  We are all different, that is okay, just find the one who is right for you.

Preparing your financial survival kit

Natural disasters are unpredictable and in many cases can be life changing for those caught up in them. The recent disasters around the world, including Christchurch, Japan and as of this morning Sumatra, have got many Kiwis talking about and actively putting their survival plans in place.

Whilst the main emphasis should be placed on preparing for the immediate survival of your family from a natural disaster, for example meeting points, food and water, we shouldn’t overlook the financial needs and possible financial issues that will arise as soon as you’ve established your loved ones are ok.

Consider that banks could be disrupted, limiting access to cash. Government assistance, insurance, and other financial relief (which may or may not cover your total loss) may not return you to the financial position you have previously enjoyed.

Ultimately, you’ll remain responsible for most if not all of your debts and other financial obligations, and as soon as disaster hits, you’ll start to feel the pressure. However, it won’t hurt as much if you are prepared.

Consider the following tips to help manage your financial situation:

  • Make copies of important records and documents, and keep them in a secure place, preferably away from your home and out of your immediate area. Items should include credit card numbers, insurance policies, financial records, tax records, loan and mortgage documents, deeds and titles, wills and trusts, prescriptions and medical records, emergency contact lists.
  •  Some experts suggest using technology, such as digital images to record your financial profile. Combine these images with the documents above, scan them, and store them online e.g. using ‘Cloud Space’ (online data backup accessible anywhere in the world) or a USB Flash Drive which you could use to store your data and then give to family or friends out of town for safe keeping.
  •  Compile and maintain a one-page financial contacts list. This list should include the phone numbers of companies you may need to contact, as well as your account numbers. Include numbers for your bank, insurer, mortgage lender, consumer credit lender, investment companies, lawyer, accountant and anything else you can think of.
  •  Maintain a fireproof and waterproof lockable box or container with important recent financial documents you can quickly grab should you have to flee. Include recent bank credit card and investment account statements; your key financial contacts list; tax returns; mortgage and insurance information; and a supply of cash.
  •  Ensure you have access to cash. Carry your EFTPOS and credit card with you at all times. Build an emergency balance in your cheque or savings account that you can tap into if a crisis hits. Consider applying now for an emergency line of credit; for example a revolving credit facility on your mortgage or an overdraft on your check account – the idea being that you only access these funds in an emergency. Just make sure you don’t incur any fees on this service while you are not using it.
  •  Review in depth your home owner’s or renter’s (i.e. contents) insurance policy with your insurer. Ensure you understand every clause in your basic and/or special insurance policies and what the outcomes would be if you needed to claim on these policies. If you are in certain high risk areas, consider adding flood or earthquake insurance. Don’t overlook special coverage necessary for computers, home offices, jewellery, artwork or other expensive items not included in your basic insurance policy.
  •  Have spare keys cut and stored away.

Most importantly – get started today.

This article is based on ‘Preparing A Financial Survival Kit’ by Broderick Perkins

Did you know that someone who sells insurance is called a “Risk Adviser”?

Why risk?  Insurance is based on risk.  It is priced on equations that insurance companies run to determine how much you will need to pay to shift the “risk” of a possible unfortunate event happening and for them to compensate you for it if it does.

On the surface this looks quite simple, but as we are all different, with different experiences, genes, and daily activities, it can make a big difference to the insurance company.  What you declare, or don’t, on your application form is vital to getting compensated if the unfortunate does happen.  If they discover that you have not declared everything they can make the contract null and void and not pay out.

The trick is to make sure you have a good adviser who understands the types of information the insurance company is looking for.  Read More