Life throws up many events for us to deal with and not all of them are pleasant.
In most cases you will have protected yourself against the financial loss these events can cause.
As we all know, typically most New Zealanders have financial protection against the little things that can go wrong but don’t protect themselves against events that can dramatically affect their lifestyle.
The table below contains typical examples of life events that can have varied impacts on our finances and lifestyle.
By completing this table, you may be able to identify events that you are not financially protected against, but could have a large impact on your lifestyle
|
Event |
Effect on your quality of your life (1 low – 5 high) | Do you have cover for this event? |
| Someone backs into your car denting your bumper | 1 2 3 4 5 | Yes/No |
| You are diagnosed with Bowel Cancer | 1 2 3 4 5 | Yes/No |
| The roof of your house leaks staining your carpet | 1 2 3 4 5 | Yes/No |
| Your new fridge breaks down | 1 2 3 4 5 | Yes/No |
| You have a heart attack | 1 2 3 4 5 | Yes/No |
| Your holiday is cancelled due to a pilot strike | 1 2 3 4 5 | Yes/No |
| You have a stroke | 1 2 3 4 5 | Yes/No |
Life is about maintaining balance. That extends to ensuring we have given thought to our financial protection plan and have developed a strategy for dealing with some of the above events should they occur to us.
You may have a thorough wealth protection plan in place however It is really important to review your wealth protection at least every couple of years. Any strengths and weaknesses in your current financial protection plans can then be identified as your situation changes. I’ve come across a number of clients who have had Income protection policies in place that wouldn’t pay the amount they had covered due to a change in situation and the type of policy they had in place. Can you imagine how gutted they would have been at claim time I have also come across clients that have insurance, are paying high premiums and do not know what they have in place or why. As with structuring a mortgage insurance needs to be reviewed on a regular basis; Questions to ask yourself are;
- Has your mortgage changed since your last review?
- Has the family grown (through marriage or children)?
- Has your income changed or have you changed your occupation?
- How would you cope financially if you suffered a major health trauma?
- How long would your savings last if you were unable to work?
- Have you stopped smoking?
Any changes in life should spark an insurance review. Insurance is effectively protecting your wealth so that if anything were to happen to you, you and your family would be financially OK. It simply takes an hour of your time on an annual basis, in that hour you could review your debt making sure that you are paying it off in the most effective way and make sure any wealth you have acquired is protected.
