Managing your personal insurance costs when things are a bit tighter

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2022 December 14

It is well accepted that many Kiwis have a relaxed attitude and may expect government and/or family to support them through a period of financial hardship. The reality is that a significant loss of household income due to illness or a medical condition can mean the difference between a comfortable future or having to live week-to-week.

Whilst 98% of homeowners insure their house and 95% of drivers insure their car, only 32% of people insure their health and just 11% their income, according to recent research. 

Richard Klipin, CEO of the Financial Services Council (FSC), who conducted the research, thinks it signals that New Zealanders are (understandably) prioritising immediate needs, however this is cause for alarm and we should not underestimate the importance of long-term thinking when it comes to our finances.

With private health, income protection, and life insurances being considered 'luxury expenses' by many it will undoubtedly cause some people to cut these insurances when finances are tightened. 

Without careful thought or savings in place, there is a chance an accustomed lifestyle would be at risk should someone face an unexpected health issue or condition affecting their long-term ability/inability work.

The question therefore remains not so much ‘are these insurances unaffordable?’, but rather ‘can you afford not to have them?’

How can you practically keep your insurances and manage the costs when things may be a bit tighter?

It is all very well to say that you need to keep your insurances but if you do have to consider the financial implications what can you do? The ICIB Life & Health team has some things for you to consider -

• Prioritise the benefits that make sense based on your current circumstances and requirements.
• Reshape your existing health insurance to cover major treatment rather than GP check-ups or scans to reduce costs.
• Introduce an excess to a health insurance policy to lower the cost.
• Adjust the 'wait period' in a disability/income protection benefit to reduce premiums whilst still covering your future (ongoing) ability to work/earn.
• Link a serious illness benefit to the Life Cover where appropriate to lower premiums.
• For business owners, consider whether it makes sense to move a portion of personal insurances across and have them owned/paid through the business.

Having a chat with your insurance advisor to review your options is a great start. They can review any existing policies and ensure that your plans are not only fit for purpose but are cost competitive as well.

For a complimentary review of your personal insurances, please contact Angela Richardson or Zac Emery on insurance@iciblife.co.nz or 09 377 4314 and we will be happy to talk through the best offerings available.