The Importance of An Insurance Review: Protecting What Matters Most
If there is one thing I've learnt, life rarely goes according to plan and often requires us to adjust things to meet our varying needs. The same should go for your insurance coverage.
If you are safeguarding your assets or protecting your business interests, an insurance review is an important step to make sure you are adequately covered. Evolving risks are part of life; having the right insurance will make all the difference.
Within this blog, I’ll explore what an insurance review is, why I cannot stress enough the importance of having one, and what to ask an insurance specialist like myself.
Let’s dive in to make sure you are well-protected!
What Is an Insurance Review?
An insurance review gives insights into your current policies to determine if they meet your needs.
When you have a sit down with a broker to discuss matters, you usually would follow a process that looks like this:
- Assessing your current coverage against your assets and liabilities.
- Identifying any gaps or overlaps in your policies.
- Ensuring you’re not overpaying for unnecessary coverage.
- Updating your policy to reflect any changes in your circumstances.
An insurance review will examine the foundations of your coverage, whether personal or business-related. Every situation is unique, and so should your insurance policies.
Why Do You Need an Insurance Review?
It’s something that many individuals overlook entirely. Insurance is not a one-size-fits-all approach, and the following are a few reasons why you may need a review:
- Life Changes Impact Coverage Needs: Buying a home, starting a business, getting married, or growing your family will all affect your insurance needs. Similarly, if your business is expanding, you will need to update your coverage.
- Cost Efficiency: An insurance review will help determine if you are getting the most coverage for your money. Could you get more coverage for less?
- Peace of Mind: Knowing that you’re properly covered gives you the confidence to focus on what matters most—running your business, enjoying your personal life, and, as a fellow parent, knowing that your children are covered.
When Should You Review Your Insurance?
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Annually: A top tip is to set a reminder on your calendar and review your insurance every year. The beginning of the new year is always an ideal time to plan and ensure you’re getting the best value.
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Major Life Changes: Marriage, divorce, purchasing a home, buying an investment property or business, having children, or significant financial changes are vital moments to reassess your coverage.
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Following Business Milestones: A flourishing business is great news, but expanded services, products, investments, assets, or staff mean it’s time to review your policies.
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Before Renewal: Avoid renewing automatically. Policies should fit your current needs and budget.
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After Industry Changes: Stay informed about trends or new risks in your industry that might affect your business insurance.
9 Questions to Ask Your Insurance Broker
To get the most out of your insurance review, ask your broker the following 9 questions:
- Is my current coverage enough for my personal and business needs?
- Are there any gaps in my coverage that I should address?
- What new risks or policies should I consider?
- Am I eligible for any discounts or cost-saving opportunities?
- What is my current level of risk exposure?
- Are there better policies available that suit my needs?
- How would a claim be handled under my current policy?
- What steps can I take to reduce my premiums without compromising coverage?
- Who is my policy owner, and does that fit my needs (or not)?
Tailoring Coverage
Personal Insurance
Your insurance should reflect your lifestyle and assets. A report by the Financial Services Council (FSC) indicated that close to 40% of Kiwis have some form of health insurance, signalling increasing demand for access to quality treatments and medications. This underlines the importance of tailoring your coverage to match your needs.
Your personal insurance should be as unique as your life. Here are critical areas to consider:
- Health Insurance: Safeguard yourself and your family by covering medical treatments and hospital care.
- Income Protection: Make sure that income loss does not affect financial stability over the course of your recovery from illnesses or injury. According to moneyhub.co.nz, 55% of households would be unable to pay their expenses and maintain their lifestyle if they lost income for four weeks after sick leave and annual leave ran out.
- Life Insurance: Provide for your family’s financial security, covering debts, daily expenses, and long-term goals in your absence.
- Disability Cover: If a disability affects your earning ability, this policy helps maintain your quality of life by replacing lost income.
- Trauma Cover: Provides a one-time lump sum payment if you’re diagnosed with a critical illness such as cancer, a heart attack, or a stroke.
- Mortgage Cover: Provides a monthly tax-free payment if you cannot work, helping to ease financial pressures such as covering your mortgage and rent or replacing lost income.
Other Considerations for Personal Insurance
Non-Pharmac Coverage
When reviewing your insurance each year, check if your health insurance has Non-Pharmac coverage. Making sure non- Pharmac coverage is included in your policy means you’ll have more treatment options if you or your family get a serious health condition. Ask your broker when discussing your health insurance if Non-Pharmac coverage is included and if your policy limits match the treatment costs. It’s a small thing that could be life-changing.
Business Insurance
Whether you’re a small start-up or a growing business, your insurance should grow with your company.
For entrepreneurs and business owners, insurance is about more than just covering assets – it’s about covering your livelihood and the business. Here are the must-haves:
- Key Person Coverage: Provide financial protection for your business if an owner or senior manager dies or suffers a severe illness.
- Life Insurance: Ensures your family’s financial stability in the unfortunate event of your death.
- Trauma Insurance: Delivers a lump-sum payout if you’re diagnosed with a critical illness like cancer, a heart attack, or a stroke.
- Total and Permanent Disability Insurance: Provides financial assistance if you become disabled and can no longer work.
- Buy/Sell Insurance: Offers a lump sum to the surviving business partner(s) to enable ownership transfer if a shareholder passes away.
KiwiSaver Review
KiwiSaver is crucial when determining the appropriate level of personal insurance coverage you might need and plays a significant role in wealth growth.
Ideally, you want your fund type selection to do the heavy lifting and maximise your returns for your retirement investment. The latest results from the Morningstar KiwiSaver Survey for Generate Focused Growth, Growth, and Moderate funds placed the three funds in the top three of their respective categories for the 10-year period ending 30 September 2024*.
Make Reviewing Your Insurance a Priority
Ready to Review? Let Rapson Help
I understand the unique needs of Kiwis regarding personal and business insurance. As an experienced broker, I will guide you through a comprehensive review to ensure you have the right coverage at the best value.
If you would like to review your KiwiSaver and look at retirement projections, we can do so, and it will take about 15 minutes via Teams. You can either book a time here (or, if you would like an evening appointment, let me know, and we can arrange a time that suits you).
Don’t wait until it’s too late—contact me, Diana McIntyre, your trusted insurance adviser, today to schedule your review.