5 Critical Ways To Protect Your Financial Security

5 Critical Ways To Protect Your Financial Security

Personal insurance is something many only think about once you need it. Do you have the policies in place to protect you, your family and your assets should the time or need arrive?

Maintaining the wellbeing of loved ones is the number one motivation for many people who choose to commit to personal insurance, whether that’s life, trauma, income or health cover.

“Money worries are the last thing someone suffering from an illness or injury need,” Lifetime financial adviser Paul Stolworthy says.

“Being able to know that your home and family is taken care of is a relief and takes away the stress that can sometimes hinder recovery as well as peace of mind.

“I handle claims so that people and their families can concentrate on each other and keeping their lives on track.”

Although there’s a different plan for everyone, one piece of advice remains the same – commit to policies as early as you can. Not only will this ensure that exclusions for pre-existing illnesses are prevented, but also that premiums are affordable over time.

1. Leaving A Financial Safety Net With Life Insurance

Dependents are the ones protected by a person’s life insurance. Once people commit to their first mortgage or significant debt, Stolworthy recommends taking out cover to support loved ones in the event of a terminal illness or sudden death.

Life insurance covers costs like mortgage debt, funeral-arrangement fees, and children’s future education or associated childcare costs.

“Life insurance is that gift the policy holder gives to someone else – the pay out, which is a lump sum, and should be designed to take care of the big costs in the dependents’ lives.”

2. Recover Your Way, In Your Time, With Trauma Insurance

A pay out for trauma cover is similarly a lump sum. Depending on the insurer, there are between 45 and 62 different conditions this type of cover can insure a road range of major health events – conditions such as cancer, stroke and heart attacks.

“Many people know someone who has suffered from, or is suffering from, the effects of a trauma-qualified condition,” Stolworthy says.

“Sickness brings a time of extreme uncertainty and being able to use the one-off payment to cover things like mortgage repayments, medical costs, transport and home modifications, as well as associated recovery bills, assists recovery and allows the family to have some breathing space to consider their options.

Last year, Stolworthy’s client was diagnosed with breast cancer just three months after her husband suffered a stroke. With her husband off work without income protection – the woman’s trauma insurance was even more vital. Stolworthy was able to make the claim with her insurer and have $57k available for the family within seven days. The woman was then able to afford car and mortgage payments as well as specialist consultations.

“It’s worth noting that after his stroke, the husband thought he was entitled to income support through his work scheme’s coverage but he wasn’t … when that $57k came through, the relief was tangible,” Stolworthy says.

3. Protect Your Biggest Asset - Your Ability To Earn With Income Protection

Income protection can seem like the most valuable cover to have.

“Arguably, the ability to earn an income is a person’s greatest asset as it’s that income that allows them to pay for day-to-day expenses,” Stolworthy says.

Income insurance is based on long-term issues, sickness or injury surrounding non-accidental incidents (therefore not covered by ACC), and in the instance of claims, payments are made in the form of a monthly benefit.

 “Up to 35 per cent of income protection claims are for mental health issues, which people just can’t see coming – things like depression, anxiety and stress,” Stolworthy says.

4. Recover Faster With Health & Medical Insurance

Health and medical insurance provides quality care for non-acute medical conditions without the need for waiting lists, he adds. Stating that with the right provider, people can have access to the best-quality care when they really need it.

“The public health service’s wait times are getting longer, meaning people’s lives are experiencing long-term impacts – case in point is my niece who has a two-year-old son; he had severe breathing difficulties due to tonsil issues and the public health system had him on a wait list. My niece knew her son couldn’t continue living with breathing issues so she arranged for private care, which at the time costs her $6k – if she had health insurance that all would have been covered.”

5. Most Importantly, Seek Professional, Tailored Advice

Securing and maintaining insurance policies doesn’t need to be a complicated or daunting process either.

“Of course insurance policies can be secured online, but they’re not personal; they don’t understand your circumstances, make assumptions based on age and automatically pitch people with increasing premiums and still might be lacking in much-needed cover.” Stolworthy says.

 “A good financial adviser tailors the insurances to fit with their client’s world, approaching risk insurance based on ‘the now’ and determining what structure best suits a person’s need – all with a view to easily adjusting plans for the future.

“The reason I became a financial adviser was to make sure people could be assured that their insurance policies directly covered their needs; I’m also able to demystify the policies so people know exactly what they are covered for, and I handle the entire claims process until they see the money in their account.

“Just recently, I helped a client claim $24k from their trauma insurer. The Hamilton-based client had recovered from prostate cancer and didn’t know what his policies covered – I assisted him his claim almost three years after the issue and received the money within two weeks – that’s just one example of how a trusted adviser is better equipped to fight your corner than making a claim through a 0800 number.”

Article by Paul Stolworthy - Get In Touch

Paul Stolworthy is an East Auckland-based financial adviser for Lifetime.