What insurance cover do I really need?

Even though I work in this field, I have no problem admitting it: insurance isn’t the most exhilarating of concepts. In fact, I’ve witnessed many glazed eyes and stifled yawns when the topic comes up in conversation.   

We all know it’s good for us – a smart investment; that nothing is more important than protecting our family, health and most valuable assets.

But it’s hard to get excited about. That’s because unlike most other purchases, its benefits are intangible. We only see them at some point in the future when something goes wrong.  

But when that time comes, we’ll thank ourselves like crazy that we had the nous to get it sorted when we did.

OK lecture over. You know why you need it and you’re ready to serious about insurance cover.

The next question is how the heck are you meant to know what type of insurance to get? Do you need them all? If not, what ones? And what type of cover should you go for?

While the need for some (like car insurance) might seem straight forward. Others (like life insurance) might feel a little fuzzier.

Let’s make sense of it all…

Consider your situation

What you need will depend on your circumstances. The good news is you won’t need absolutely everything on offer. Most people couldn’t afford that anyway.

Instead, you need to think about what your main risks are, the chances of those occurring, the consequences if they do and whether you could cope financially in that situation.

Another way to think about it is to weigh up the risks of not having insurance cover vs the cost of paying for it.

Even if the likelihood of something going wrong is low, but the impact high, insurance is important.

For example, the risk of dying early may be relatively small, but the financial consequence on your family if they’re left with a large mortgage may be large (if they couldn’t afford to service it). In that case, life insurance would be important. 

Ask yourself: Could I cope financially if something goes wrong? If not, insurance is likely worth getting.

Let’s take a closer look at some of the common types of insurance.

Life insurance

This is where your family would (generally) get a lump sum payment if you pass away. You might consider life insurance if you share a large debt with your partner, for example - like a mortgage. 

That way, if one of you were to die, the other wouldn’t be left to pay back the debt on their own. You might cover yourself for the amount on the mortgage, plus an extra sum that would help them cope financially without you. 

Health insurance

Alongside life insurance, this is one I highly recommend. That’s because besides our loved ones, our health has got to be right up there in terms of what’s most important in life.  

Health insurance will cover the bills for non-acute medical conditions and mean no long and uncomfortable wait times on the public health system.

No, it’s not the cheapest of investments, but if you can afford it, it’s worth prioritising – even over some other insurances. You may eventually be able to replace a stolen laptop for example, but your health is another story.

Income protection

This will cover you if you need to take time off work because of sickness or injury. Remember, ACC only applies if you have an accident, not if you’re off work with an illness. 

So, again, ask yourself – would you and your family manage financially if you were off sick with an illness? If not, you may want to consider income protection.

House and contents insurance

Your home is likely your most valuable asset, so protecting it is a must. And when it comes to contents, even if you don’t feel like you have a whole heap of valuable items in your home, it’s important to consider whether you could afford to replace essential items should they be destroyed or stolen.

For example, how much would it cost to replace your wardrobe alone (let alone all necessary day-to-day items should your home be destroyed in a fire)?

Tips for buying insurance

  • Shop around and compare quotes and policy details to get the best coverage.
  • Insurance companies must now be registered on the official government Financial Service Providers Register. Make sure you check yours is before making any purchases.
  • Read policies carefully, including fine print. Exclusions are often listed, such as certain illnesses or treatments – be clear on that before you buy.
  • Choose a policy excess that suits your situation. A high excess will mean a lower premium. I recommend choosing a policy excess that matches the point at which it would become a struggle to make the excess payment.
  • Review your policies regularly (at least annually), and particularly if your circumstances change. 

How to choose the right cover

The best way to make sure you get what you need is to take the time to understand what you’re buying.

Compare options from different providers, but not just on price. Read the detail and figure out which offers the best coverage for your investment.

It can be tempting to skim through the fine print and think ‘she’ll be right’. But if you want to avoid disappointment when it comes time to making a claim, you need to know what you’re covering yourself for.

There are plenty of online calculators out there to help figure out what you need and how much it might cost. Or a financial advisor, like myself, can set you on the right track. 

Need a hand?

We can take the hassle out of organising insurance for you and help you every step of the way – from completing a personal risk analysis, to finding the right insurer and cover to meet your needs.

If you’d like more insurance information or want to discuss your options, get in touch and let’s get you sorted.

The Finance Marshall
0508 543 627


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