As we celebrate Christmas and put 2020 behind us we should all take a few moments to reflect on managing our affairs in 2021.
To help you in this task we have identified a number of perspectives that we want you to consider:
Survival Funds – Establish a ‘Rainy Day Fund’
You need to have the equivalent of 3 months of your income as savings in your ‘Rainy Day Fund’.
You need to create a ‘do not touch’ rule that prevents it being used for holidays or cars and other discretionary purchases.
Protect Your Income – Your Most Important Asset
Ask yourself what happens to you, if over the coming week you were advised by your medical experts that you can’t work for the next 3 months because of illness.
If you have no Survival Fund, then what do you do?
You need to consider a Loss of Earnings Agreed Value insurance policy which will cover up to 75% of your taxable earnings.
Trauma / Crisis Management
Trauma Insurance, next to medical insurance, is the most ‘claimed on’ product within the life insurance industry. Statistically 33% of New Zealanders will suffer a significant medical trauma, be it accident or sickness, between age 25 and age 65.
We recommend that every income earner needs to cover a minimum 12 months’ household income plus two years rent or mortgage repayments.
Your Children’s Options For Their Future
Kids’ Trauma Insurance with Guaranteed Future Insurability
We recommend a sum insured of $100,000 per child for a cost of as little as $5.00 per month per child.
At the age of 21 the child can then take over the policy.
You are insuring your children’s insurability for a further $300,000 of cover without further medical or lifestyle underwriting.
Medical Care When You Need It
Make sure you purchase the best available medical insurance program prior to the onset of medical decline
Once you have a medical problem you are no longer insurable at standard rates, if at all.
The most important part of a medical policy is identifying one that will pay non-Pharmac approved drugs and therapies.
Making Insurance Affordable In Your Later Years
Convert insurance that you know you will need to retain in your later life to Level Premium
Level Premium ensures that you will always be able to afford to pay the premiums on the ‘core’ long term portion of your insurance protection.
Retirement – Save Earlier And Budget More
In the magazine Rethinking Retirement, four tips were:
Prepare a budget and stick to it.
Emergency funds are for actual unforeseen expenses not ones you can budget for.
Maintain adequate insurance for the things you cannot afford to fund or lose.
You always need a back-up plan i.e. part time work, renting out space in your office, garage or home. Home equity release loans etc.
We Can Help
If, after reflecting on the above, you need to discuss any of these perspectives then please feel free to contact Kevin or Brian at any stage. Their contact details are as follows:
Kevin – mobile 021 240 4540, email firstname.lastname@example.org
Brian – mobile 021 227 6035, email email@example.com
Otherwise we will contact you during 2021 as part of our annual review process.
Wishing you a Merry Christmas and a happy and safe festive season.
I keep saying to clients “the healthiest you are when applying for insurance is today….. in most instances you will not receive a better offer of terms then how you present today”
Prior to Christmas 2019 I prepared an audit report with recommendations for a business colleague. Instead of taking the time to act on the advice (which he knew he had to take) he said he would “look at the report over Christmas and get back to me in the new year”.
During the Christmas break after an extensive mountain bike ride he had some health related issues which he was advised to be investigated on his return. But after having had a well-rested time away with family, the condition did not seem to bother him further and he did not pursue the recommended investigations.
Now that we are back to level 1 the tough questions you must ask are:
What’s my income per week or month?
How much am I saving per week or month?
Do I have a ‘rainy day’ reserve?
How long can I survive without a paycheque?
Is my job safe?
Will my insurance programme cover my risks?
How KSL Insurance can help
I expect that my 50 years of commercial experience and insurance expertise will be required more than ever. Everyone should now undertake a full personal and family risk assessment followed by a review of their insurance arrangements. In assessing risk there are two perspectives that you need to think about:
As an essential service business during the Covid-19 lockdown period, KSL Insurance advisers and staff have been working remotely from our homes. We are open for business and can help you with a review of your insurances which for a lot of our clients this is timely.
Our advisers have been ringing as many clients as we can over the past two weeks to see if you need any advice or premium relief assistance in respect to your insurance program as a result of the Covid-19 crisis.
We are very aware that the longer we remain in lockdown the more complex our lives become and the considerable uncertainty and anxiety for many. Uncertainty of incomes, possible loss of employment, questions of sustainability of businesses are some of the major issues many will be confronting. It is therefore very important that you identify and take advantage of all the support networks that you have available to you.
The events of the last three weeks have changed the environment that we operate in and consequently we have devoted a substantial part of this newsletter to what we now all need to focus on. Please make certain that you are aware of the steps that you can take to minimize the effect that Coronavirus is going to have on you and your family’s wellbeing.
We were originally intending that this newsletter would share with our clients the focus of the Maurice Trapp Group’s (our business owner), strategy of providing “best practice” sales and service consistent with the KSL Insurance “we care” philosophy. It is the Maurice Trapp Group’s intention to grow KSL Insurance and to offer additional services and products over time to our clients.
KSL Insurance will be appointing highly qualified advisers who can provide quality advice to clients in the ongoing servicing and auditing of new and existing clients’ insurance portfolios.
We are all embarking on a journey that we are very unfamiliar with. Notwithstanding this unfamiliarity, we must be steadfast in the belief that we can successfully make the journey, however long. And when it does end, we will be forever changed in terms of our attitudes, our future approach to risk and insurance, how we engage with others, and how we transact business.
We have been closely monitoring the Covid-19 pandemic progression worldwide and the response, including that of our government. We are supportive of the measures taken to protect New Zealanders. In response our office at Ferry Road is now closed until further notice.
However, please be assured that we are alert to the consequences of the pandemic and the consequences of the closedown on our clients. We are now working remotely and your adviser and the support team can be contacted as follows:
Kevin Seque, mobile 021 240 4540, or email firstname.lastname@example.org
Brian Seque, mobile 021 227 6035, or email email@example.com
Grace Downs, mobile 027 652 4334, or email firstname.lastname@example.org
Jack Radford, mobile 021 627 049, or email email@example.com
Sharon Empson, redirect from 03 365 4460, or email firstname.lastname@example.org
The outbreak of the Coronavirus has captured all our attention and as yet we still do not have a clear view of what is going to happen in the future. The uncertainties of the ability for the virus to be largely contained with China remain, and the prospect of it spreading aggressively in other countries still exists. Thankfully the New Zealand government followed the quarantine measures introduced by many countries, including Australia and the US, which stopped all flights to and from mainland China.
So what should you do now from a risk management perspective?
The potential impact of the Coronavirus started me thinking about the reason people have for owning personal insurance policies. Basically it is to provide financial certainty if something catastrophic occurs that their assets and their families are safe and protected from life’s curveballs.
I see the Coronavirus as one of those potential curveballs that is totally outside our control and could be devastating. So, I set out a series of questions for you to answer to check if you are prepared for this now ‘known’ event that may come our way.
Will you leave your family with a secure financial position if you die next week?
What happens if you cannot work for between 3 and 6 months due to illness. Will your employer continue to pay you or can your business afford to pay for your replacement?
Are you financially prepared if you suffered a major trauma or critical illness?
What would happen if you were diagnosed as being permanently disabled and no longer able to ever work again?
Are you prepared financially for a non-urgent elective surgery costing $30,000 or more?
Coronavirus and its effects should motivate you to revisit your insurance portfolio to ensure that you have the correct levels of insurance, funded appropriately, correct ownership and that you are confident that the insurer has the financial capacity to pay.
It is extremely important that the insurance company managing and underwriting you and your family’s financial future, has the international strength and financial capacity to meet catastrophic claims conditions. KSL’s recommended panel of insurers do.
Your Preparedness Action Plan
Having been a survivor of both a heart attack and cancer I can certify that “I am financially prepared”. Are you?
My intention in this letter is not to create alarm; rather it is to urge you to make sure you are prepared for whatever may happen.
Contact me on telephone 021 240 4540 or email me at email@example.com to arrange a suitable time to catch up and review your insurance program.
I look forward to working with you.
KSL Insurance Limited
Kevin Seque AFA FSP 108805 Insurance and Audit Specialist
Effectively developing and managing our personal insurance portfolio is a critical part of assuring that our family’s financial security and lifestyle is not put at risk. Just as we are encouraged to develop long term savings strategies for our retirement by establishing a portfolio of assets, we also need risk management strategies to protect our income that is used to generate our savings, and to ensure adverse health and accident events do not prevent us from being able to retain our asset portfolio.
For many people understanding the issues, analysis and jargon of personal insurance is daunting and often results in ‘whatever you think is best for me’ solutions. Consequently, deciding who you are going to work with in developing your personal insurance portfolio is one of the more important decisions you make in planning your life’s journey; it is much like deciding on who your solicitor, accountant or doctor will be.
A recent survey(1) undertaken by the Financial Services Council identified that ‘peace of mind’ is paramount to people when taking out a personal insurance policy. This peace of mind stems from the relationship between the person selling and the person buying; in very simple terms, it is ‘trust’. And as one respondent from the above survey commented: “Also, with peace of mind you feel more in control. You are able to carry on.”
Choosing your adviser
So let’s take you on a journey where you can explore what you need to know in choosing an adviser to help you develop and manage your personal insurance portfolio.The first thing you need to accept is ‘this is going to be an important relationship that, if successful, will last your lifetime and beyond.’ Hence the initial focus has to be on trusting your adviser. This comes from many perspectives but there are five things about advisers that are particularly important; being able to listen, being able to understand your point of view, having the background and experience, being with you for the long haul, and doing what they say they are going to do.
In the insurance industry there are many differing labels used to describe marketing and sales people including insurance agents, advisers, and brokers. Some are employees and some are independent contractors. Some have an almost tied relationship with one insurance company, while others use a wider range. Some are on a salary, some are on retainers, some are on commission on new sales, and some are on a combination of commission on new sales and servicing fees from existing clients.
For the typical family the insurance adviser must commit to a long term relationship. In doing so there needs to be a process in place whereby regular (annual) reviews are undertaken to ensure your insurance portfolio is appropriate for your family’s evolving circumstances.
At KSL Insurance Limited we recognise that we are in the people industry. We help families weather the storms they face and underpin their future success. While we are small in terms of the number of people in Christchurch, we are large in terms of our experience (Kevin 49 years, Brian 23 years) and resources we can call on to help.
Now having the Maurice Trapp Group as one of our major shareholders means that we have access to a broad range of additional skills and resources, as well as providing continuity in terms of succession.
What is your most valuable asset?
I am frequently asked what the most valuable asset a person can have; my answer is always the same. Your ability to earn…. and the only thing stopping you from earning is your health. While we all understand this, it is surprising that insurance to protect personal income is still one of the least popular mainstream insurance policies purchased.
The Reasons for not having Income Protection Insurance?
Cost…the perception that the cost of premiums cannot be justified.
‘It will never happen to me’ attitude to accidents and illness.
The Government will protect me through ACC and sickness benefits.
The Consequences of not having Income Protection Insurance?
Most New Zealand families live payday to payday; 80% of New Zealanders families cannot scrape together $10,000 in cash for an emergency without mortgaging something. I have watched the bitter experiences of a number of my clients when their ‘secure’ world collapses after losing their income through accident or illness resulting in financial ruin that follows from not owning income protection insurance. The consequence that follow include:
Recently I was undertaking some research in support of my belief that every family in New Zealand needs to consider medical Insurance as a cornerstone of their risk management plan.
The data I obtained from AIA Insurance validated my belief.
• People over 65 comprise 12% of the population but consume 40% of health spending.
• By 2051 the proportion of the population over 65 is estimated to double with the share of the total health spending increasing to 63%.
In my opinion, Government health spending will increasingly need to be “rationed” in the future. The focus will be increasingly on acute services and those most in need. Threshold levels for elective surgery will inevitably increase.
Elective surgery and diagnostic services not identified as an emergency and not life threatening will be prioritised within the Public Health System; notwithstanding the fact that it can improve a person’s health and quality of life.
In many situations diagnostic procedures are essential before a decision can be made to proceed with surgery, and there can often be delays in obtaining these diagnostic services through the public hospital services.
Elective services include hip and knee replacement, heart surgery, hysterectomy, cataract removal, cancerous tumor removal and diagnostic services such as endoscopy, laparoscopy, colonoscopy and MRI scans. While these services will continue to be provided by the public health system, they are increasingly becoming the domain of the private medical health industry.