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What kind of insurance do I need for myself and my family?

No one likes paying for insurance until they actually need to claim on it. It almost feels like you can get away with not having any, but life happens, and not having insurance can be a huge burden on your family if something happens to you, your income or your home itself. Let’s have a look at the options:

Mortgage Protection

As previously mentioned in this article, Mortgage Protection provides monthly payments if you are unable to work due to sickness or injury. This insurance type is designed to protect you and your family from falling behind on your mortgage payments in an already painful situation. Because mortgages are a long financial commitment, often over 25 years, making regular payments every single year might not always be possible, as accidents happen and health can deteriorate over this time. Mortgage Protection safeguards your home, so it seems like a no-brainer to invest in this kind of insurance. It’s important to shop around and compare prices and benefits for this kind of protection, as different providers offer different benefits.

  • The “Wait Period” – The monthly payments for Mortgage Protection begin after the ‘wait period’ ends. You can choose how long you want this period to be, usually 30, 60 or 90 days, depending on your provider.
  • The “Benefit Period”- This is the period where your monthly payments are made and again, you can choose how long this period is to be. Two years, five years or to age 65 or 70.

House Insurance

Buying your first home is a huge milestone, and you want to make sure that your investment is protected. This kind of insurance protects you if damage comes to your property, caused by fire or other unexpected events. It ensures that you can have your home rebuilt or repaired if the worst happens.

  • Don’t underinsure – When investing in House Insurance, you must make sure that your insurance covers the full rebuild cost of your home. If you don’t, and the worst happens, you may not be able to afford to have your home repaired even after making a claim.
  • Shop around – There are many house insurance providers who offer many different pros and cons, so make that you find the perfect one for your particular needs and budget.
  • Don’t wait to get insurance – As soon as you can, you should ensure your home as a disaster can strike at any time, not only when it is convenient for you.

Contents Insurance

You have your home insured! Great! Now, what about all of your belongings? House Insurance doesn’t offer automatically cover everything you own, so you want to take out contents insurance to make sure that if the worst happens, you can have all of your valuables replaced and are not left out of pocket.

Some insurance providers will offer a discount on premiums if you take out multiple policies with them, so you should do your homework and find out which option works out cheaper. Again, do not underinsure your contents. Many people easily underestimate how much it would cost to replace all of the valuables that a house can hold.

Life Insurance

Not strictly to do with owning a home, but a useful option to look after your family and help with the mortgage if you are ever diagnosed with a terminal illness or die suddenly within the period set out by the policy. The terms and amounts are determined by which policy you take out with your provider so can decide how much your family can be paid to secure their futures if something ever happened to you.

As a general rule, the higher the excess, the lower the premiums when it comes to insurance. If you want/need to reduce your premium payments then choosing a high excess is a way to do it. Do remember though, that the excess you choose is the lump-sum amount that you have to be able to afford when it comes to making a claim.

Income Protection Insurance

If you become ill or injured, and are no longer able to work for an amount of time, Income Protection Insurance provides monthly payouts so that your bills, mortgage or rent are paid for. You can focus on getting better and not stress about how you will maintain your lifestyle financially. Depending on which provider you go with, there are many options to choose from to assist you financially during your recovery. These can include

  • Reimbursement for additional childcare
  • Cover suspension if you go on parental leave or unpaid leave
  • Access to partial payments once you return to work
  • Additional lump sum if an illness or injury leaves you permanently disabled
  • Waiver of wait period if your disability returns within 6-12 months of going off claim
  • A lump-sum payment towards modifying your home or buying specialised equipment to aid your recovery or accommodate a disability
  • A Bed Confinement Benefit if you are forced into full-time care in a bed for more than 3 days during the waiting period.

Vocational assistance if you are unable to return to your previous line of work Different providers offer different benefits and different levels of support, some are more tailored to those who have dependents living with them so if that is a worry of yours, make sure you choose a provider that includes cover for your children’s’ expenses as well as your own.

Some Income Protection Insurance plans can have an optional Redundancy Benefit added on as well for extra peace of mind, so that if you are made redundant after you have had your cover for more than 6 months – you will be eligible for that Redundancy Benefit to be paid to you for a set amount of time so that you have time to secure new income.

Private Health Insurance

For when you want peace of mind that any illnesses or injuries that come your way can be treated quickly without wrecking your bank account. Not having health insurance can mean that if you do develop or have a condition and it is not related to an accident, you won’t be able to rely on New Zealand’s ACC (Accident Compensation Corporation) for treatment. This can be a costly risk to take, with the added stress of not being able to choose your specialist and longer waits to be treated.

Going private means you will avoid hospital waiting lists (which can be extremely long waits) and the cost of extended periods of time off work. Having private health insurance gives you access to the best medical professionals, more options for treatments, and peace of mind for you and your family. Even if you do not foresee yourself getting sick, or injured, having insurance to cover regular health checks to pick up on any serious illnesses early is a worthwhile investment. The further along you let an illness, like cancer and heart problems, go undetected, the harder and more expensive it becomes to treat.

When selecting a Health Insurance provider, you will need to select a base plan which covers a wide range of ailments and then you can add what optional extras you require to get a bespoke insurance plan that suits you best. Check into your family history of hereditary illnesses so you know what you might need to have covered in the future. Breaking the bank over an illness that your parents or grandparents had is a completely avoidable mistake, so make sure you have as much information on your own medical background to assist your decisions. Many illnesses and injuries are unforeseen, but how you plan for those unknowns can make a big difference to you and your family.

With private health insurance, you can claim back on your medical bills, so keeping a record of all your receipts to make sure you are getting the most out of your health insurance payouts is an important process to stay on top of. What exactly can be claimed varies from provider to provider, so always make sure you have a comprehensive list from providers on what they cover, and what they don’t – so there is no confusion come claim time.

Redundancy Insurance

This kind of insurance is an optional income protection add-on, which becomes useful in the event that you are made involuntarily redundant from your employment. It is used to make sure your bills, rent or mortgage continues getting paid for a period of time to give you the extra help you need while searching for new income.

Generally, Redundancy Insurance covers a maximum payment of $5,000 per month over a 6 month period, just enough time to secure new employment. There can be a misconception that Redundancy Insurance is automatically included in Income Protection Insurance, it is a separate insurance policy that must be added on to your plan – so make sure you know the full inclusive details before signing on the dotted line.

Things to be aware of with this kind of insurance

  • Restructuring within your business organisation – It can be very hard to get paid out on a claim if your organisation has been ‘restructuring’ within the 6 months prior to you taking out a redundancy insurance policy. Read the small print carefully of your
    policy, and be wary of restructuring within a business as it is very common and can make your policy null and void when it comes to claiming.
  • The 30 day wait period – Your policy may not kick in until the waiting period is over, which means you can’t get a payment made to you until 30 days after your redundancy is made effective. Be aware of what that may mean financially for you.

Trauma Insurance (also known as Critical Illness Insurance)

This particular kind of insurance is designed to support you and your family financially if you you develop a serious condition from a specific list of medical conditions, and survive for at least 14 days after the event that caused it. The insurance pays out a non-taxable lump sum in the unlikely and unfortunate event that one of these illnesses/injuries falls upon you.

Having this kind of insurance takes the pressure off worrying about the financial burden and lets you focus on recovering or making final arrangements instead. The illnesses vary and you should always check with your provider for a comprehensive list of fully and partially claimable ailments. These can include

  • Cancers
  • Heart Conditions
  • Major Neurological Disease or Trauma
  • Paralysis and loss of functionality
  • Burns
  • HIV
  • Intensive care
  • Major transplants
  • Illnesses such as Crohn’s Disease, Diabetes and terminal illnesses

There are many other benefits of Trauma/Critical Illness Insurance cover, and these vary provider to provider. Some include specifically tailored benefits for illnesses suffered by children and infants, which takes a terrible monetary burden off an already suffering parents’ shoulders. The insurance is designed to make the worst situations more bearable for you and your family to get through without the added financial strain.

Total & Permanent Disability Insurance

TPD Insurance is an optional add-on that is made available in conjunction with many plans across many providers. This particular insurance covers payments for a person who, as a result of illness or injury, suffers one of the following

  • Loss of independent existence
  • Loss of sight or limbs.
  • Permanently unable to work

In the event that you become permanently disabled and unable to work, or partially disabled and unable to work, a non-taxable lump sum fee would be paid out to ease any financial strain as a result of these conditions. This cover is designed to be paid out if you are unable to work in your own occupation, not just any occupation that you may be able to perform.

People often consider permanent disability more horrific than death itself, as you may not be able to earn your own income and are still alive, which obviously means you still have financial outgoings in the way of food, housing, clothing, heating and medical bills. It is an extremely expensive and stressful way to live, and that is why TPD insurance exists. The age range for this benefit is between 16 and 55 (60 for certain occupations). Check with your insurance provider about the details of their particular TPD insurance terms and conditions.

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