#InsuranceDilemma #IncomeProtection #LifeInsurance #HealthInsurance
Hey fellow Kiwis! 🇳🇿💸
So, I recently found myself in a bit of a pickle with my income protection insurance and I’m curious to hear your thoughts on the matter. Here’s a quick rundown of my situation:
– After a long term financially controlling relationship, I sought out a financial advisor who ended up retiring and leaving me in the lurch.
– Now, I pay a significant chunk of my paycheck to an income protection agency without having life or health insurance.
– I’m starting to question if this is the best move for my financial security, especially at my age and gender (mid-40s, female).
So, my burning question is: do you guys rely on income protection like me, or do you prefer other forms of insurance like life or health coverage? And most importantly, why?
I’m all ears for any advice or experiences you can share. 🙏
Possible solution:
– Consider consulting a new financial advisor to review your current insurance portfolio and recommend a better-suited plan that aligns with your goals and needs.
Let’s help each other out and navigate this confusing insurance world together! 💪#FinancialPlanning #RiskMitigation #InsuranceAdvice
Life insurance is completely unrelated. It only benefits someone else when you die. If you dont have depedants, you probably dont need it. (Not advice) income protections is for your own benefit and is absolutely a good thing to have… assuming you get the cost/benefit right.
Theres also an options of ‘bills/mortgage’ insurance which is typically cheaper and provides a specific amount of money each week- perhaps look into that? Trademe (and others) have aome good online comparison tools. I get REALLY sick of seeing ppl pop up on ‘give me’ pages- they had the same chance as everyone else to plan accordingly but failed to do so. And then want hand outs. You are something like 7-8X more likely to need income protection than life insurance- eg more likely to be unable to work than to die before getting too old
I would try to call the insurance company and ask if there are options to reduce the cost.
This is not advice.
First who is your insurer – Advice First is the agency but not the insurer. Understand who your insurer is. Compare your current IP insurance to the market using lifedirect.co.nz. Each insurer has different benefits but if you’re paying too much compared to market, consider changing or reducing the cover amount
Secondly do consider having trauma or health insurance for unexpected illnesses. If you have non dependents or would like to leave any for nephews or nieces, skip life insurance.
I have an related but off-topic question for anyone reading, hope that’s ok.
Is there any such thing (in NZ) as income protection insurance that covers you if you just lose your job, through no fault of your own, such as downsizing or your company going into liquidation?
Scrap the income protection, its generally a waste of money for a healthy adult, particularly if you’re working in a desk job, and if you get an injury that prevents you from working, ACC pays up to 80% of your income if they cover that injury.
If you’ve got no dependents, then life insurance is a waste of money as well. If you’ve got a partner or kids, and a mortgage then its worthwhile.
For me, health insurance is the highest priority, now that I’m over the age of 35. My uncle got diagnosed with Stage 4 prostate cancer last year, and it took 12 months for them to operate on him in the public health system.
I have trauma and health insurance then I recently got income protection because of getting mortgage. Health insurance is for treatment related cost (surgery etc), trauma insurance for a lump sum payment to deal with expenses at diagnosis then income protection if I can’t work again/for long period (such as from neuro issues). The latter has an extended waiting period to reduce premium as my trauma insurance, emergency saving, annual leaves etc can cover first few months of me not working.
I’ll start off with I’ve got income protection myself. Reason is my role is a very specialized role in Healthcare. If I ever have any reasons why I can’t work in this role it would be difficult for me to find another job that pays me to what I’m earning now.
So for an example my job requires me to stand and use my hands etc with very fine motor controls. Any situation that arises that prevents me from doing that means I won’t be able to do my job well. Hence the need of income protection.
If you’re in consulting or desk job etc, think of the amount of circumstances where it could lead you not being able to work in your role. If it’s not a lot, then you probably wouldn’t need income protection as much.
If you had cancer ( your context that you brought up), income protection wouldn’t necessarily play a big role, it only kicks in when because of cancer you can’t work etc at all. The chances of you needing income protection for the next 20 yrs till you’re 65 if you do have cancer is very slim. Because you either die of cancer or you recover of cancer and you’re back to work. Obviously without contect of what your job is, that’s not fully all that true but you get my gist.
If you had cancer, critical illness insurance etc comes into play with more advantage than income protection does.
Also sorry to hear about your financial advisor. Feels like that’s usually the rep I hear about FA these days.
Unrelated to your question but may help your financial situation, do you know whether the cost of your income protection insurance is deductible? And if so, have you been deducting it to claim back some of the cost?
[https://www.ird.govt.nz/income-tax/income-tax-for-individuals/types-of-individual-expenses](https://www.ird.govt.nz/income-tax/income-tax-for-individuals/types-of-individual-expenses)
Generally, if the payout is taxable then the premiums are deductible.
It is a difficult calculation.
Personally, I think they are a waste of time, as you should be building up a portfolio in the “good” times.
However, if you have a massive amount of debt it may make sense if it helps you sleep at night?
I think this has been talked about a couple of times on the sub, so have a search and see if you can find a few more answers there; if that’s helpful.
Personally I have income protection insurance as I’m the sole earner paying the mortgage and bills. It gives me peace of mind to know I would be covered if something happened. I don’t have life insurance as I see a lump sum payment for death less useful, in my situation. I think it would be useful to run a few “what ifs” and think through how/who would pay if different things were to occur.
The other thing to look at in the policy is when they’ll start paying out. Most insurers have a month or two stand down (might not be the right term) before they’ll start paying. Maybe you already know that, but just wanted to highlight that you’ll still need some money set aside to use before the income protection insurance kicks in.
I have had income protection insurance for the last 20 years and have questioned continuing it, though in current climate makes sense to continue. I’m sure the agent gets paid out the annual fee increase which bugs me as they don’t need to do anything. My insurer is AIA.