To Insure or Not Insure?
Surprisingly enough this seems to be the question largely on my first home buyers minds. Given most New Zealanders have car insurance, you wouldn't think whether or not you should insure your most valuable asset, e.g. your health and your ability to earn a living, would require so much thought.
So let's look at the stats: 1 in 3 New Zealanders will be impacted by cancer at some time in their life, either personally or through a friend or relative. (Source) If we consider that optional cancer treatment, not funded by the public health system comes in at $130k a pop for a 4 course treatment it's a wonder we aren't all lining up to take out a Trauma or Critical Illness policy.
In fact most New Zealanders don't even consider signing up for a personal risk policy until they purchase their first home. Given the average first home buyer’s age in New Zealand is 25-29 (Source) and if we consider the most dangerous time of a Male's life is in the under 30 bracket, it's of some concern that most Kiwi's aren't considering how they can protect themselves until then.
I spent my high school years growing up in a small country town. In my extended social circle were some of the unluckiest friends you’ve ever heard of, all with a combined average age of death at under 30. All of these young men had funerals that had to be paid for from regular working class families, I can’t remember any of these families as being notably wealthy. As you can imagine, the last question you want someone you love to be asking in the event of your tragic death whilst feeling the pain of your loss is: 'How am I going to pay for the funeral?'
And let’s face it, quite often the real expense is not if you die...it's if you live. We have ACC in this country of which we should be extremely grateful, however if you are to suffer from an accident that leaves you being a tetraplegic ACC is not going to help you recognise your life’s dreams. You’ll get basic help but will it be enough to cover an especially converted car, widened hall ways, ramps to replace the stairs, mobility scooters and caregivers catering to your needs for the rest of your life, a cost running into the hundreds of thousands of dollars - would you really want to be doing this on a budget when life is this tough? I think not.
For the price of a couple of cups of coffee per week a male in his mid-20's can have a Critical Illness policy enabling a lump sum of money to be paid out in the event they're diagnosed with one of over 40 named medical conditions, think heart attack, cancer and stroke, which are the 3 leading causes of death and disablement in this country. For the price of lunch that same male can add an income protection or mortgage protection policy providing a monthly income up until retirement age.
So the question we should really be asking ourselves is not if we should insure, it's what our budget for insurance actually is. I say it to my clients time and again, some cover is always going to be better than none at all.
This information is general information only and must not be relied upon as legal advice. A disclosure statement is available here.