Why (and how) to keep your insurance policies during recession
With mortgage rates and inflation rocketing in 2023, we know there are many families out there who are struggling with the cost of living and looking for ways to make savings.
Our team of registered financial advisers across Aotearoa works with clients from every walk of life, and a question that’s on many people’s lips over the last few months is ‘do I really need to be paying for insurance right now?’.
It’s a tough predicament. On one hand, you want to protect yourself and those you love from financial hardship if you have an accident, become seriously ill or pass away. But, on the other, when you’re looking for ways to save it can be tempting to take a risk on the basis that the worst may never happen.
Why you should keep your insurance policies current – even during recession.
The Plus4 group has been operating for more than twenty years, during which time we’ve seen the effects of various challenging economic climates – including the Global Financial Crisis (GFC), which was one of the toughest financial periods in living memory.
Having been through tough economic cycles with our clients before, we’ve observed how various approaches to insurance can play out. Based on what we’ve experienced, we can’t emphasise enough how important it is to keep your life, trauma, health and income insurance policies current.
Over the years, we’ve heard many examples of families that have chosen to cancel their insurance policies and then been struck by an accident, terminal illness or death. It’s heartbreaking – especially when the client had intended to reinstate their insurance when the economic climate improved.
From a practical perspective, if you’re weighing up whether to keep your insurance, it’s also important to consider that – if you cancel your policy and then open a new one later – you may not be covered for illness or death relating to conditions that arose while you were previously insured. That’s because a new insurer may consider those conditions to be pre-existing and ineligible for cover.
Another thing to bear in mind is that your life and health insurance policies will include a cash payout should you be diagnosed with a serious or terminal illness. By keeping these current, you will also be able to access additional, unfunded treatments and your family will also have access to a payout to help with funeral costs should you pass away. All of these benefits are extremely important in taking financial pressure off families during these kinds of events.
Worried about the cost of keeping your insurance? How we can help.
Getting insurance through a broker, life Plus4, means that – along with great insurance – you have the benefit of access to a registered financial adviser who can help you make the best possible decisions around insurance and risk.
We know how tough this year has been for many families across Aotearoa. Unfortunately, we also know how much tougher things can be if you subtract one income from the situation. One way to think of it, is in terms of deciding what to do if you’re caught in a leaking boat. In that scenario, it is understandable that you would want to throw things overboard to lighten the load – but to throw the lifejackets overboard would be absolutely bonkers.
If you’re needing to make savings in order to survive the current financial climate, talk to us about making short-term adjustments to your policy.
This could include things like:
Removing add-ons that you currently have in place
Increasing your excess
Reducing cover slightly on both policies, rather than deleting one entirely
Taking this kind of approach will enable you to maintain good baseline cover to give you some financial assistance should the worst eventuate.
So, before you make any decisions about your life insurance policy, talk to one of our team – they’re here to help. Find your nearest Plus4 adviser here.