What are the chances of making a claim?

What are the chances of making a claim? And how much do insurers really pay out?

As an adviser who has been in the industry for almost a decade, I have witnessed New Zealand becoming a far more insurance conscious nation. However, for Life, Trauma, Income Protection and Medical Insurance we are still massively under-insured. In fact, Massey University researchers concluded we are under-insured by $650 Billion. Yes, you read right, that’s Billion with a capital B!

Under-insurance for each product in NZ is estimated as;

$195.6b Life
$58.7b Trauma
$351.8b Permanent Disability
$2.97b Income Protection (per month!)

I personally put our under-insured statistics down to people still relying on a government “plan b”, such as ACC as one example. The problem with this strategy is that ACC pays in the event of an accident only, and accidents are only responsible for a very small percentage of people who are unable to work. Other reasons behind the concerning stats are the Kiwi “harden up” or “she’ll be right” attitudes that still prevail. Every week I see first-hand what great insurance does, as well as, the harsh reality for those that take the “she’ll be right” path.

So, what are the risks and what are your chances of having to make a claim?

Before I answer this question let me be clear, when you buy insurance, you are not necessarily buying a claim, you are buying piece of mind and choice. Choice - to not have to sell your home to pay the bills should you get cancer. Choice - to get lifesaving medications that are not funded by the public health system. Choice - that if you can’t work, the last 10-20 years of busting your gut wouldn’t have been for nothing, because you have income protection to cover your household and business expenses.

The facts

For a 35 year old, non- smoking couple, these are the very real health risks before you reach the age of 65 (provided by independent research company QPR);

Death (before 65) 18%
Total & Permanent Disability (before 65) 9%
Trauma or Critical Illness (before 65) 29%
Disabled for 6 months (before 65) 24%
Health insurance claim 100%

Claim amounts

There is the old stereotype, “insurance companies never pay” or “they just want to wriggle out of it”. Of course in any industry, there are better providers than others and it is important to get advice on who the best insurer/s are for your personal circumstances. My worst nightmare as an adviser is a claim being declined and I do everything to avoid it. The reality is there is a huge amount of claims being paid to people when they need it the most. The real, undisputed numbers for claims are:

Life insurance: Over $1 Billion p.a.
Health insurance: $1.15 Billion p.a. and rising by approx $100 Million p.a.

These don’t even don’t take into account; Trauma, Income Protection or Total Permanent Disability (TPD) covers.

Armed with these facts I encourage you to sit down and have a think or chat to your partner and consider; What is your family’s "plan B" if you’re not around tomorrow? How long could you financially survive if no income was coming in the door due to accident or illness? Or if you have insurance, are you confident you know exactly what job it does and doesn’t do?

If you have any questions or for free, unbiased advice don’t hesitate to email me at Jamie@clickcover.co.nz or visit us online at www.clickcover.co.nz