The New Year is often a reminder that a review of your physical health may be due. But what about your financial well-being? Getting into shape financially should also include making sure the insurance cover you have fits your needs. To help you get started, we’ve put together four resolutions to consider for 2015.
Resolution #1 – Get insurance smart
– Set aside half a day to familiarise yourself with your insurance paperwork. Remind yourself what you are and aren’t covered for… and who provides your cover. You’d be surprised by how many times we are contacted by someone who says: “I think I’ve got insurance with you but I’m not sure.”
Make sure someone else – perhaps a spouse or a lawyer – knows where to find out information such as who your insurer is and the type/s of cover you have (i.e. home, car etc). Ensuring your affairs are in order now can help prevent difficulties arising should tragedy strike. No-one would want a family member or someone representing their estate to be left wondering whether they are covered. In the worst cases, premiums go unpaid and cover is discovered to have lapsed. Unravelling insurance at a time of loss can be stressful and add to grief. Dealing with such matters now can help save a heap of heartache later on.
– Understand insurance terms. An insurance policy is a contract between you and your insurer. Just as you wouldn’t enter a business contract without first reading the detail, it’s important you understand the obligations your insurer has to you, and those you have to them – all of which is outlined in your policy. But it can be a little like learning a new language. For example, are you sure you understand the terms used in the policy such as “indemnity” or “market value”? How about trying to learn one word a week? State has a useful glossary to help get you started: http://www.state.co.nz/about-state-insurance/glossary/pages/default.aspx.
– Get to know more about what risks you can insure for. Use that knowledge to consider the appropriate level of cover for your needs – this can be one of the best financial defense strategies to take.
Resolution #2: Talk to your insurer
– One of the most important questions you can ask yourself is: Do I have adequate or appropriate insurance cover right now? Make arrangements to meet or talk with an insurance professional to discuss this and ask questions about the terms of your policies, what’s included or excluded, or if there are any changes that have happened that you may have missed. For example, in New Zealand many home insurance policies have changed in the past 18 months, requiring homeowners to specify a maximum sum insured amount. To help homeowners understand the change, IAG created this information site www.need2know.org.nz which should give a good basis of understanding from which you can talk to your insurer about what the change means specifically for you.
Ask about that special item you’ve got and whether, or how much is it covered for? Splashed out on a bike? Do you ride it on-road or off-road? Does it matter? Sure does. “A general conversation can unearth some important considerations. For example, have you kept your insurer or agent updated on changes in your family or to your property? This is crucial to your financial security,” says Kevin Hughes, who looks after customers across both AMI and State insurance brands. “A home renovation project, a major purchase, a new baby or a family member leaving home are just some of things that could significantly impact your insurance needs and costs.”
Resolution #3: Tailor your coverage
You wouldn’t go out in pants that are too short, would you, so why would you pay good money for insurance cover that doesn’t fit? This year, resolve to “try on” your insurance to see if it still fits. Whether its home, contents, car cover, or some or all of these things, if your circumstances have changed since you took out a policy, it may be time to review. For example, have you downsized your home recently? Or have your upsized and need some stretch (we’re talking here about your insurance, not your pants…)?
Resolution #4: Let value, not price, be your guide
In a perfect world, your best insurance choice would be the cheapest. In that same perfect world, chocolate would be good for your skin. Just as chocolate is best enjoyed as part of balanced diet, in reality you’re likely best served by an insurance policy that fits your needs on a whole range of features, including excess (the first amount you pay towards a claim), exclusions (what isn’t covered) and policy limits (maximum amounts payable towards a claim), not merely price.