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What do my insurances mean??? What is covered that I don’t know about???
August 27, 2021
What do my insurances mean??? What is covered that I don’t know about???
We often get client’s that don’t really understand what their insurances mean let alone how they work. I would like to run through a few tips and insights to insurance policies.
Firstly, Trauma cover – one of the best covers you could have but what is it for? It is for that diagnosis of something that will have an impact on your life ie: cancer, heart attack, stroke. When these situations happen, a lump some of money takes away that stress of paying your bills.
Also did you know most trauma cover has built in free kid’s trauma up to $50,000. This is for if something happened to your child that will make an impact on your life. Not something we like to think about, but if it happens its worth its weight in gold. Some companies even allow your kids to convert that cover when they turn 21 years of age to Life and Trauma Cover with no health questions asked. Of course each company has different policy wordings here but we will make sure you know and understand what you can and cannot do.
Income Protection or Mortgage Protection, these covers are designed to help you when you are not able to work due to illness or injury. Unlike trauma cover where it must be a covered condition, these covers work as soon as you cannot work and have met your waiting period. There are also different types of waiting periods such as: 4, 8, 13, 26, 52 or 104 weeks. Of course, the longer you wait the cheaper the premiums.
However you have to be able to manage the time you’re waiting to get your payment.
These payments get paid out monthly and most insurance companies required a monthly medical update which is completed by your doctor.
Some Income/Mortgage Protection policies also have built in benefits if you were to break a bone! These are lump sum payments (one off per injury) without any waiting period. There is a lot of ins and outs that your adviser can help you with. If in doubt about any claim – please ask your insurance adviser.
Medical Insurance. Everyone will need some sort of drugs or operation within their lifetime – if you don’t – you are very very lucky! Medical insurance is designed to pay for medical costs (after your excess if you select one) and some policies cover your specialist appointments and tests such as MRI, CT and X-Rays.
Some policies also have a wavier of excess benefit – this means if you were to get for example cancer and you had a $1,000 excess – this will be waived due to your condition.
Medical insurance is not cheap however but there are ways and means of making it work for you! High excesses are an option as we still have a good public system to fall back on.
Another thing to look out for is what your policy covers in regard to Non- PHARMAC drugs. This is huge. We are always seeing Give-A-Little pages for people that have cancer for example and need to fund raise lots of money to pay for drugs to help save their life! This is the last thing you want to be doing so make sure you check with your adviser if your medical insurance has cover for Non-PHARMAC drugs.
Total and Permanent Disability (TPD) this is one that not many people understand. It is for if you can never do your job again. One thing to look out for with this cover is to much sure you can get ‘own occupation’ not ‘any occupation’ – some occupation of course you will be only able to get ‘any occupation’ for example heavy/dangerous manual jobs like firefighters, forestry workers etc.
The reason ‘own occupation’ is so important is that if you can never do your ‘own occupation’ again, your TPD payment should pay out. If it is ‘any occupation’ you may not be paid out if you can still do a job you used to do back in the day. Check with your insurance adviser what occupation you come under – ‘own’ or ‘any’.
Life Cover it’s the last cover you will never need or use. Most life cover polices are the same – you pass away, the cover gets paid out. One thing you may not know about Life Cover is that if you are diagnosed with a terminal illness (not likely to survive 12 months) your Life Cover will be paid out. This is a huge help for you and your loved ones to work out what you’re going to do before you pass away and gives the person who is dying certainty that their loves ones will be ok financial when the pass away.
Other built-in benefits to some products people are not aware of is Special Events Increases. Say for example you have a baby or get married even divorced – are you aware that you can increase some of your covers without medical underwriting? This is HUGE! Say you have got a condition that’s developed since your insurance were taken out and you and had a baby. You can increase your life or trauma cover (Ts and Cs apply per company) without been medically assessed. Worth looking into this benefit!
Insurance shouldn’t be complicated – it should be helpful when it is required – people sometimes thing it’s a waste of money – many people that have experienced a claim would beg to differ!
Insurance doesn’t have to cost the earth – stay within your means! It’s good to have some cover than none. Regular reviews of your insurances should happen to as in life, your situation is forever changing which means possibly your insurances need to change to reflect this.
But most of all – we want to help you FIX your insurance problem. With full financial advice so you can clear your debts and accumulate wealth through KiwiSaver and other investments in a timely manner, so your need for insurance becomes less and less, to the point that it is not required at all.
So please do ask us any questions you have and ensure we have regular catch ups or if something happens you let us know as soon as possible.
A word from Rodney Smith
We all LOVE budgeting right … not! But it is the most powerful foundation to our financial future to ensure that we can move forward with growing our wealth for the future. (picture along the side with a high-rise building showing the solid foundation and saying ‘the solid foundation’ and then the high-rise building with the title pointing to it saying ‘our strong wealth creation strategy’ – maybe cartoon-ish) The best way to manage this area is to start with a robust budget sheet and fill in what you spend money on in a year. Click the link at the bottom to download our budget sheet. Creating Your Budget: Start by listing all your sources of income and then categorise your expenses into fixed (like rent, utilities) and variable (like groceries, entertainment). Allocate a portion of your income towards savings and debt repayment. Tracking Your Expenses: Keep track of every cent you spend. It might seem tedious at first, but it's crucial for understanding your spending habits. Use apps or spreadsheets to make tracking easier and more efficient. Managing Cash Flow: Ensure that you have enough income to cover your day-to-day expenses. Build an emergency fund to handle unexpected expenses without derailing your financial plans. Avoiding Debt Trap: While some debts, like mortgages or student loans, might be unavoidable, and in theory are for an asset that will grow in value over time, strive to minimise high-interest debt like credit card debt. Pay more than the minimum payment to accelerate debt repayment and save on interest. Adjusting Your Budget: Life is unpredictable, and so are your finances. Regularly review and adjust your budget to accommodate changes in income, expenses, or financial goals. Tips for Success: Live Below Your Means: Don't succumb to lifestyle inflation. Instead of spending more when you earn more, save and invest the difference. Set SMART Goals: Make your financial goals Specific, Measurable, Achievable, Relevant, and Time-bound. This will give you clarity and motivation. Automate Your Finances: Set up automatic transfers for savings, investments, and bill payments. This reduces the temptation to spend money meant for other purposes. Stay Disciplined: Stick to your budget even when faced with temptations. Remember, short-term sacrifices lead to long-term financial freedom. ACTION POINT: Budgeting and cash management are not just about numbers; they're about taking control of your financial destiny. By mastering these skills, you're laying the groundwork for a future filled with financial security and prosperity. So, take charge of your finances today, and watch as your dreams transform into reality. Remember, you've got this!
Article written by InvestNow – 17 July 2023 “Buy low, sell high” is the standard advice for generating capital returns on investment assets, however, this advice doesn’t provide practical guidance on how to actually spot the ideal buying and selling opportunities. In today’s fast-moving and increasingly volatile market, it’s a full-time job attempting to time the market, and even still it’s a mighty difficult task that even the experts get wrong from time to time… Managing volatility the DCA way Volatility is and will always be a feature of investment markets, especially with higher-risk assets like equities and cryptocurrencies. While the degree of market uncertainty varies over time, investors must make decisions based on their own circumstances and risk tolerance, regardless of background conditions. Dollar cost averaging (DCA) is an investment strategy where an investor regularly invests a fixed amount of money into a particular investment over time, regardless of the investment’s price fluctuations. This strategy aims to reduce the impact of short-term market volatility by spreading the investment purchases across different market conditions. Dollar cost averaging is commonly used by retail investors to invest in managed funds in New Zealand, offering several benefits. Mitigating market timing risk: Dollar cost averaging reduces the risk of making poor investment decisions based on short-term market fluctuations. It eliminates the need to time the market, which can be challenging for even seasoned investors. Potential for lower average purchase price: When markets are volatile and prices are low, the fixed investment amount buys more shares or units of the managed fund. Conversely, when prices are high, the fixed investment amount buys fewer shares. Over time, this strategy can result in a lower average purchase price per share, potentially enhancing long-term returns. Disciplined approach to investing: Dollar cost averaging encourages discipline by ensuring regular investments, regardless of market sentiment or investor emotions. It helps avoid making impulsive investment decisions based on market highs or lows. Averaging out market volatility: Dollar cost averaging helps smooth out the impact of market volatility over the lifetime of your investment. Rather than making a lump-sum investment, which could be significantly affected by the market’s immediate ups and downs. The proof is in the pudding Ignoring buy-sell spreads, and assuming some variation in unit pricing over a 5-month period, if two investors both had $1000 to invest in the same asset, and one investor invested 100% of the $1000 in a single transaction in month 1, and the other investor invested 20% ($200) each month from month 1 to month 5, the outcome would be as follows:
The mortgage vs investing question – yes when interest rates are high it is definitely hard to understand why you should invest… but it is simply the effect of the compounding interest over time (the 8th wonder of the world), so in theory you actually have to save less over your lifetime as the compounding is exponential. Rather than having to plough significantly more into investments later in life (after the mortgage is cleared), the fact it costs YOU more the later you leave it. Honestly, though I get it – debt sucks and it would be SO amazing to be debt free and not have that burden weighing you down. But investing doesn’t have to be anything significant if you do start early though … a simple $100 per month to start with is a fantastic start … so don’t overthink it and feel like you have to do anything dramatic. Give us a yell to talk about starting a small investment TODAY!!!
Did you know PIS Manawatu has two of these…
Let’s talk about Wills. It is an incredibly important thing to have in place, and while it is not a nice thing to think about, it is very necessary. There is a website called Footprint NZ which is New Zealand’s largest online Will provider. Yes, you can make a Will online these days! A website like this is brilliant because it allows you to think about this difficult topic in your own home and in your own time. You should have a Will if you have personal assets of more than $15,000 as if you do pass away without a Will, this will result in your assets being dispersed according to the Administration Act, which means you could be leaving funds to unintended beneficiaries. We recommend you write a Will as soon as you start to acquire assets. A Will gives you the peace of mind, knowing that you have made a list of instructions that legally have to be followed and that your assets will pass to the people that you have chosen. To get started you can head to https://www.myfootprint.co.nz/ sign up and answer a few questions, pay and visit your personalised Footprint dashboard, create your Will, and finally submit, review, and sign your Will. According to Footprint NZ, it can take as little as 16 minutes to complete your Will, so if you are looking to organise your affairs do explore this website.
How to get rich … sooner! If I had a dollar for every new client who told me that .. “they wish they knew this financial stuff earlier and acted sooner”! So why do people seek Financial Advice too late and why are their financial affairs in such disarray? Is this something that we can change as a profession? Over the years as an Adviser (25 years) I have delved into this conundrum and I have some thoughts. Our first Money Memory: Have you ever heard about this concept of … “your money memory”. It explains that as children we start to form an opinion of what money is and how we should interact with it from a VERY young age … 7 years old! And again at age 14 years we will look for more clues about money and by age 21 we have our very own ‘money memory’ cemented into our sub conscious. For example: If, as a 7 year old, you were lucky enough to get whatever you wanted then you start to believe that you should have all you desire. Fast track that 20 years and there may be an adult with lots of stuff but no savings or other assets!!! Or if you were a child of a poor family and did not have much then you might have a higher value and respect for money in the future and look after it much more carefully as an adult. What role does our family environment play in this? And is this just in our family environment or at our schools too? My 6-year-old recently came home from school with a new toy and I asked where he had got that from. His reply was “the treat box from school”. I then enquired “what did you do to get something from the treat box?”, he said “I was really good Mum and did all my work”. “Well done, good boy” I replied. But on reflection I now see that this might not be the greatest idea. Simply rewarding him for doing what he should already be doing could manifest into him believing that he should always be rewarded or have treats if he is just doing what he should do. Then almost immediately thought of several clients whom in the past have made that comment … “but I work hard shouldn’t I have what I want” … to their financial detriment! They cannot afford to be indulging all the time for the simplest of achievements. Have we started to get to the bottom of the problem maybe? Advertising and Social Media: What about advertising and social media! Manipulating us to believe we need the latest this and that and how much cooler, or popular we will be if we ‘just had that’. Is this to blame? And it’s only when we become older and don’t actually care what others think anymore and realise that we have wasted all that money over the years and now we have nothing to show for it that we seek out financial advice. So, what can we do as Advisers to break this cycle and educate children, and young adults sooner? We need to act NOW and let our clients know that their children and grandchildren are already forming their “money memory” and give them tools to help children on the right pathway sooner. Get into schools at a much earlier age with bright, colourful resources and fun games to play and we need to be advocates for financial literacy for our young people. Do not let talking about money and bills be a taboo subject and encourage open and honest discussions regularly. We can all do something to educate our next generation on financial matters. I challenge you to work out a plan to be part of the solution. By Maryann Pratt Certified Financial Planner Authorised Financial Adviser
Complaints Procedure
Complaints handling and dispute resolution: If you are not satisfied with our financial advice service you can make a complaint by emailing admin@pismanawatu.co.nz, or by calling 06 355 4422. You can also write to us at PO Box 1255, Palmerston North 4440. When we receive a complaint, we will consider it using our internal complaints process:
• We will consider your complaint and let you know how we intend to resolve it. We may need to contact you to get further information about your complaint.
• We aim to resolve complaints within 5 working days of receiving them. If we can’t, we will contact you within that time to let you know we need more time to consider your complaint.
• We will contact you by phone or email to let you know whether we can resolve your complaint and how we propose to do so.
If we can’t resolve your complaint, or you aren’t satisfied with the way we propose to do so, you can contact Financial Services Complaints Limited (FSCL) – A Financial Ombudsman Service. FSCL provides a free, independent dispute resolution service that may help investigate or resolve your complaint if we haven’t been able to resolve your complaint to your satisfaction. You can contact FSCL by Phone – 0800 347 257 or complaints@fscl.org.nz.