Ungaro&Co

Insurance Advisory Service

April 23rd, 2009

There are worse things in life than death. Have you ever spent an evening with an insurance adviser?
Woody Allen

Long gone are the days of the slicked back hair and sleazy sales tactics for life insurance advisers. There is very tough (long overdue) regulation coming into effect next year that will govern how all New Zealand insurance brokers operate. This is great news for people who need to receive good, trustworthy advice on all aspects of personal insurance including Life Insurance, Medical Insurance, and Income Protection Insurance. A point of difference with Ungaro & Co is that we work across the whole spectrum, giving you advice on the most appropriate risk management strategy should be - with or without insurance contracts.

Our role with regards to advising you on the most appropriate risk management strategy is to discover the most appropriate insurance plan for you. The next step involves modification of this plan to fit within your budget. Just like with mortgages, we aim to give you options – we don’t work for just one insurance company but have contracts with several.

We believe we would be doing you harm, if we did not put in place a strategy to protect you from what in reality, can happen to many of us. The reality is, crap happens - and it’s not always happening to someone else! Have a look at this real life case study from this year:

http://www.youtube.com/watch?v=k730CE32pPo&feature=search

Life Insurance

• What is it? It should actually be called Death Insurance, but that’s not a very sexy name for it. This pays out a lump sum in event of death. Most policies will actually pay out early also, if you are diagnosed with something terminal which means you will die in a year. There is roughly a 1 in 10 chance that you will die before the age of 65.
• Why do You need it? Because it’s the cheapest and most efficient way to take care of those people that depend on you, in the event that you are taken out of the picture.
• How much do You need? Get advice on this, but a rough rule of thumb is: add up your mortgage, add $150k for each child, take 2 years of your annual gross income, and there you have it.
• Do You need Medical tests? Sometimes yes, depending on the level of cover – but this is usually paid for by the insurance company.

Income Protection / Mortgage Protection Insurance

• What is it? Unlike life insurance, which gets paid out as a lump sum, this gets paid to you monthly, in the event that you are unable to go to work due to Illness, Injury, or sometimes, Redundancy.
• What about ACC? ACC in New Zealand is great – they assist you if you are unable to go to work due to accident by paying you a % of your income. Statistically however, you are more likely to be off work due to illness than to be off work due to accident – you therefore need to have income protection to ensure your biggest commitments, like your mortgage, are still being paid.
• How much does this cost? It can be expensive, but it also can be custom ‘tweaked’ to fit around your budget.
• The is roughly a 40% chance you could be off work for 6 months or more due to illness before the age of 65.

Medical Insurance

• If I’m young and healthy, why would I need it? Because you’re young and healthy! This is the time to get it, as when you get older and things start going wrong, it can be difficult to get medical insurance on favorable terms.
• How does it work? Medical Insurance usually pays for all, or a % of surgical treatment. You can also get additional cover that takes care of specialist consultations and specialist tests. You can even get cover to reimburse costs for GP visits, dental visits and optical also.
• How does one insurance company rank over others? With medical insurance, you generally get what you pay for – if you are on a cheap plan, it probably does not cover much and may have a lot of conditions around how much you could claim for a procedure. Because there is a huge difference between all the different insurance companies it is extremely important to get our advice on what option is right for you.
• My employer has an insurance scheme at work. Many employers do schemes, but this is not always with the provider that is best for your specific situation. Things to watch our for with medical insurance -  Does it pay for treatment if the medicine is not fully subsidised by Pharmac (like Herceptin for breast cancer)? Which companies are likely to increase their premiums faster as time goes on? Are they able to change your contract at any stage providing they give you written warning?. This is a highly specialised area of insurance and ideally you should arrange your medical insurance independent of your employer with an adviser like us.
• There is roughly a 400% chance that you will claim under your medical policy before the age of 65. Make sure it is a good policy!

There are other types of insurance also and it is strongly advised that you sit down with an adviser, like us, so that you know all of your options before you decide to take action - it is always best to analyse your needs and not the products, and that is where we come in. Remember, some insurance is better than nothing – you may not be able to afford the most thorough of insurance plans, but you can always afford something – so start with something, but get it reviewed by us every couple of years once your circumstances, and budget, changes.

Be Aware of the Following:

• Never get insurance from your bank, arrange online, or deal directly with an insurance company – If you deal through an adviser, you will have an advocate at claim time, in case you have any troubles – it is easier to have a relationship with a person rather than an institution.
• Never cancel your insurance without getting a new insurance plan first. This is because you may have (known or unknown) developed a health condition that would not be included in the new insurance plan, which is included in your existing one.
• Never choose insurance based on price. As a general rule, you get what you pay for. If you are paying more for insurance with company A vs company B, chances are company A has a better plan. This is not always the case however, so it is best to have this regularly reviewed by your adviser to make sure that your chosen insurance provider is competitive
• Premiums go up, but seldom go down. Unlike car insurance, you generally don’t have ‘no claims’ discounts with personal insurances. There are ways to ‘lock in’ insurance premiums over a period of time – similar to getting a fixed rate mortgage. These are generally more expensive initially, but are way cheaper in the long term.