Personal insurance: Where on earth do I start?

Personal insurance to protect your family
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Most New Zealanders take steps to insure their house, contents and car, then promptly forget about their most important asset: themselves! But given that we never know what’s around the corner, it makes sense to take some time to consider protecting ourselves with life, trauma, mortgage or income protection personal insurance.

Our in-house insurance expert, Goran Loncar, looks at the different kinds of insurance available and when they might come in handy – your own personal starter guide to personal insurance!

Start at the end, then work backwards

Before you start thumbing through policy documents or filling out forms, it’s a good idea to consider your overall financial situation. Would your partner be able to service the mortgage on their income alone? Would you have the means to service your current debt levels if you were blindsided by an unexpected medical diagnosis or injury? For most people, life insurance is a good starting point. Other types of insurance, such as trauma or medical, can then be added on as finances allow.

Don’t discount trauma insurance

These days, the likelihood of surviving a heart attack, a stroke or cancer is the highest it’s ever been – but there’s a possibility that you’ll be left incapacitated in some way as a result. You may not be able to return to work full time, or even in the same industry. Trauma insurance pays you a lump sum benefit that gives you and your family some breathing space to get back on your feet. Some policies cover up to 60 distinct medical conditions.

The importance of shopping around

It’s pretty common for banks to offer you the opportunity to have your banking, mortgage, and insurance under the same roof. It’s tempting to take them up on their offer, but there’s so much to be said for shopping around and getting an idea of the other options out there. Going through the underwriting process might be more time-consuming than just answering a few quick questions at the bank, but it does give the insurer a much bigger picture of your overall health and wellbeing. In others words, you’re way less likely to be declined at claim time for non-disclosure.

Protect your income and your mortgage

While you can’t fully insure both your income and your mortgage – that would effectively be insuring yourself twice – you can be strategic with your choice of cover to ensure that you’re fully protected. It can even work out cheaper as well! You can insure up to 115% of your mortgage payments with mortgage repayment cover, then take out an income protection policy that covers the remainder of your income that’s not servicing your mortgage.

Personal insurance options for all types of income

If you’re on salary or wages, you can set up an income protection policy that pays out 62.5% of your normal income if you’re unable to work. For those who are self-employed, you’d shift onto an indemnity policy that would look to pay you a percentage of your income at the time that you made the claim. Whatever your source of income, it’s well worth chatting to an insurance advisor who has no doubt seen it all before.

Don’t leave it until it’s too late

Insurance is one of those things that’s easy to relegate to the bottom of the ‘life admin’ pile. After all, no-one gets out of bed in the morning thinking that they’re going to get hit by a bus or be diagnosed with a terminal illness. But life as we know it can change in an instant, so it’s well worth an investment of your time now – and yes, some form-filling – to ensure that you’re covered when you need it the most.

We’re not in the business of selling you insurance you don’t need – just honest, up-front advice to ensure that you’re all sorted if anything doesn’t go exactly to plan… If you’re keen to chat further about what options are out there, drop us a line today.

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