The woman had to cope not only with grief, and with children devastated by the loss of their father, but also with hurriedly entering the workforce at too low a pay rate.<\/p>\n
Insurance matters. And the sad thing is that the people who most need it \u2013 those on low incomes with not many resources \u2013 are the least likely to have it. Even if you\u2019re not well off, please get some basic cover. There are tips below on how to keep the costs down.<\/p>\n
But first, let\u2019s look at the basic idea. It\u2019s best to go through life feeling \u201cripped off\u201d by insurance. If you never get your money\u2019s worth, that means you haven\u2019t had to make many claims.<\/p>\n
The people on the other side \u2013 those who get back more than they ever paid in premiums (the money you pay for insurance) \u2013 are the unlucky ones. They\u2019ve had lots of bad stuff happen to them, and while their insurance payouts helped, there\u2019s still the hassle of claiming and replacing items, and sometimes the heartache of losing a home or a loved one.<\/p>\n
It\u2019s often said \u2013 at least by those in the insurance industry \u2013 that New Zealanders have too little insurance. And indeed, we rank pretty low internationally for life and disability insurance, although we\u2019re not so bad on contents and cars. We used to be okay on house insurance, too, but some experts are worrying that our homes are now under-insured, since premiums rose a lot in the aftermath of the Canterbury earthquakes and several weather disasters since then.<\/p>\n
Some tips on types of insurance:<\/p>\n
Life insurance<\/p>\n
The woman I described above, whose husband died without insurance, probably also didn\u2019t have life insurance herself. It\u2019s common for non-employed parents not to be insured. <\/p>\n
But if they die, their partner can struggle with having to pay for child minding, cleaning and all the other tasks homemakers often do.<\/p>\n
If you have dependants and you don\u2019t want them to feel angry \u2013 as well as sad \u2013 if you\u2019re hit by the proverbial bus, get life insurance. How much? There are several online life insurance calculators. Most are run by insurance companies, so they might be a tiny bit motivated to oversell. But you can rely on the calculator on Consumer NZ\u2019s website, www.consumer.org.nz.<\/p>\n
(To use it, you have to belong to Consumer NZ. If you don\u2019t, I strongly recommend you join. You get unbiased advice on all sorts of products and services \u2013 based on trials and research and also surveys of members on things like brand reliability. I never make a major purchase without reading what Consumer says first. And it\u2019s great on minor purchases, too. Also, Consumer will often go into bat for you if you have a dispute with a company that you can\u2019t resolve.)<\/p>\n
Choose term life insurance, which covers you for a fixed period \u2013 perhaps until your dependent children have flown the coop, or your mortgage is paid off, when you may want to reduce your cover or stop it altogether. On the other hand, don\u2019t neglect to add to your life insurance if another child is born or you take on a new mortgage.<\/p>\n
You can get much cheaper life insurance that pays out only if you die in an accident. But it\u2019s cheap because few people die that way. Don\u2019t be sucked in. Your dependants need money regardless of how you die.<\/p>\n
Income protection or disability insurance<\/p>\n
This is sometimes called loss of income or income replacement insurance. There are various types of policies, some of which come as part of life insurance.<\/p>\n
Typically, you will receive money if you are unable to work for a month or three months. The payments may last for a fixed period, or until you\u2019re 65.<\/p>\n
If you\u2019re employed, ask your employer how long they will continue to pay you if you are unable to work. You don\u2019t want to pay for cover when your employer will cover you.<\/p>\n
Just as with life insurance, non-employed parents also need disability insurance. If a homemaker becomes disabled, extra money would be really helpful.<\/p>\n
House and contents insurance<\/p>\n
Before non-homeowners skip this bit, it\u2019s a really good idea for you to get contents insurance. Bad things are just as likely \u2013 if not more so \u2013 to happen to your stuff if you are renting.<\/p>\n
For homeowners, of course, you need both house and contents covered. How can you tell if, say, a carpet ruined in a flood comes under house or contents? Imagine turning the house upside down and shaking it. What falls is contents.<\/p>\n
So, with the example of the carpet, it depends on whether it\u2019s tacked down or not.<\/p>\n
Note that policies vary on whether your damaged items will be replaced with new ones or you\u2019ll be given only enough to buy second-hand goods.<\/p>\n
It\u2019s a good idea to record the serial numbers of all your electronic equipment, to help prove you had it.<\/p>\n
Car insurance<\/p>\n
You should always get at least third-party insurance, which covers you if you accidentally damage someone else\u2019s car. Your vehicle might be an old dunger, but what if you run into a Rolls-Royce and it\u2019s your fault?<\/p>\n
But of course it\u2019s better to have cover for your car, too.<\/p>\n
And be honest when you apply \u2013 not just because your mother said you should, but because it could cost you dearly if you\u2019re not. It\u2019s easy enough to \u201cforget\u201d when you\u2019re applying for car insurance that you\u2019ve been in a few crashes or committed a couple of serious driving offences. Or you forget to tell the company if you modify the car. Until you claim.<\/p>\n
It\u2019s much cheaper for the insurance company to check you out only at claim time. Many people never make claims, so the company never checks them. But when the company comes back after your claim and says, \u201cSorry, but you didn\u2019t tell us, so you\u2019re not covered,\u201d you\u2019ll wish you had listened to your mum.<\/p>\n
Note that you won\u2019t be covered if you\u2019re doing something illegal when you crash the car, such as driving drunk. And that\u2019s the very time when you\u2019re more likely to have an accident. It\u2019s simple really \u2013 don\u2019t drink and drive.<\/p>\n
As your car gets older and is worth less, keep an eye on the insured value. There\u2019s no point in paying to insure a car for $10,000 when it\u2019s now worth only $6000. Or is there?<\/p>\n
With my previous car, I had an \u201cagreed value\u201d \u2013 how much the insurance company would pay if the car was written off.<\/p>\n
Every now and then I would call them and say, \u201cMy car is no longer worth that much. So how much less would the premium be if I dropped the cover?\u201d The reduction in the premium was always so pathetic that I left the agreed value as it was. And when a relative wrote off my car, I was pretty happy to get the higher amount!<\/p>\n
However, if your cover is for the \u201cmarket value\u201d of your car, the company will pay out only what it\u2019s currently worth, so don\u2019t pay additional money for insurance above that amount.<\/p>\n
True tale: What if the other guy is not insured?<\/p>\n
\u201cSomething that made a huge difference to us with our car insurance was \u2018cover for uninsured drivers\u2019,\u201d says a friend.<\/p>\n
\u2018It means if you\u2019re in a crash and the other driver is at fault and uninsured, the insurance company will cover your car. It wasn\u2019t standard with our third-party insurance, but the salesman suggested it, and it cost something like $3 a year.<\/p>\n
\u201cWhen we had a crash on the motorway, the guy at fault wasn\u2019t insured. He had been ordered by the courts to pay us off at about $7 a week. He made two full payments, then half two weeks later, then nothing.<\/p>\n
\u201cI had forgotten that I\u2019d got that extra cover. But the company called me up and immediately paid out the full value of our written-off car (no excess), then tried to recover that money from the guy themselves. I was very glad I\u2019d paid that few extra dollars.<\/p>\n
\u201cWhen I got insurance for the next car I had to specifically ask for it, and the salesman hadn\u2019t sold it before. But again, it was about $3 a year.\u201d<\/p>\n
Moral: Get that extra cover.<\/p>\n
Travel insurance<\/p>\n
Dispute resolution schemes \u2013 which sort out problems between you and financial service providers \u2013 say travel insurance problems loom large on their list of disputes.<\/p>\n
There are so many things that can go wrong when travelling, and we don\u2019t always bother to read all the fine print of insurance that will last for just one holiday.<\/p>\n
But it\u2019s important to get good travel insurance. There are horror stories of people running up overseas bills of hundreds of thousands of dollars for medical care.<\/p>\n
Who to go with \u2013 without spending hours researching it for one measly trip? This is the sort of situation when Consumer NZ comes to the fore. Check out their recommendations.<\/p>\n
Health insurance<\/p>\n
This is a bit like car insurance. It\u2019s tempting when applying to \u201cforget\u201d earlier health problems or pre-existing illnesses. Your premiums will be lower if you don\u2019t go into all of that.<\/p>\n
Don\u2019t be tempted. Again, you won\u2019t be challenged until you make a claim. But \u201cNo cover\u201d is the last thing you need to hear when you\u2019re unwell.<\/p>\n
Some people drop health insurance \u2013 perhaps in retirement when the premiums soar \u2013 saying the state system will take good care of them. After all, many top medical specialists work in public health as well as privately.<\/p>\n
But I don\u2019t recommend that. Often health insurance will enable you to get medical attention faster, with more choice about who treats you, and sometimes in a better facility.<\/p>\n
When you\u2019ve got medical problems, these issues \u2013 especially the faster service \u2013 might matter a lot. Looking at photos of your last holiday, funded by dropping your health insurance, won\u2019t quite make up for slower action, less choice and fewer comforts.<\/p>\n
Rich Enough? A Laid-back Guide for Every Kiwi, by Mary Holm is published by HarperCollins Aotearoa New Zealand.<\/p>\n