Philip Holland Financial Independence financialindependence

This is a question we often get asked and, in short, the answer is no.

In many ways it comes back to the old theory, ‘you get what you pay for'. Whilst generally this is true, in the life insurance world this is not always the case.

We have seen many policies sold to unsuspecting people that are what we would consider ‘substandard' yet are the same premium amount or higher than other far superior life insurance policies.

For example, a recent client had life insurance in place. After reviewing his cover we found out it was accidental death cover only, so if he had of died by an illness, there would be no cover for him and his young family. After quoting him on full life cover we found that the premium was almost identical. You can guess where his insurance is now.

Another big issue is with Trauma or Living Assurance type policies, where the wordings can make a huge difference at claim time. For example, as professional insurance advisers, we utilise up to date research* rating the various Trauma insurance policies in the New Zealand market.

It is really interesting to note some of the big variances in the policy wordings. For example, two of the three lowest rated policies are bank products and the third is a policy from a company advertising heavily with a famous ex sports star.
The difference from a ‘D' rated product to an ‘A+' rated product is quite substantial and interestingly the amount of the premiums are not that different.

My recommendation is if you are serious about ensuring that claim time for you is as stress free as possible, it would pay to have a review done on your policies. Also, if you did not receive advice from an adviser I would suggest to also do this to ensure that you have the right mix of products and amounts to ensure you are actually covered for what you wish to have happen should disaster strike you or your family.
I know this may sound like a sales pitch. However, I make no apologies for trying to ensure that everyone has access to good quality professional insurance advice. I have seen too many times the impact of either poor advice or no advice has on families.

New Zealanders are generally woefully underinsured. Having to continually remind clients, the public and other professionals about the importance of having insurance in place can be tiring. The more good work is done out there, however, means that another family can be saved from financial hardship should something go horribly wrong.

* The research is provided by a third party firm and Financial Independence pays for this research.

Philip Holland is the managing director for the Financial Independence group, Tauranga's leading specialist insurance and mortgage advisers. A Disclosure Statement is available free of charge on request. The opinions stated in this article are those of the writer and should not be taken as specific advice.