Insuring your family’s future

Whether you’re deciding how best to protect your family with a life insurance policy, health insurance to cover your new family’s medical needs, or you’re concerned about your job and considering an income protection plan, it’s essential you’re doing all you can to protect your family’s financial future.

As a new parent or a parent-to-be, your health and wellbeing and that of your family is important to you. And while insurance is not something you think about every day, the arrival of a new baby is a good time to take a closer look at just how much cover your family has. 

Health insurance

When you weigh up whether or not you need health insurance, consider what it would cost to cover you and your family for major health expenses like surgery, as well as your day-to-day doctor visits.

Thankfully, New Zealand’s public health system provides excellent cover in emergency and acute surgery situations. But for non-emergency and elective procedures, you’ll be assessed by the public health system and wait-listed, which means you could be put off for a week, a few months, or even years.

Self-insuring is an option, provided you’re disciplined about putting money aside each month for health costs. But for most families with young children, health insurance is the obvious solution.

There are a number of benefits to health insurance for families, most important of which is being able to get medical treatment for your family as soon as it’s needed. Health insurance lets your family get the treatment they need without having to wait.

If you don’t already have health insurance, you can take out a policy for you and your baby at the same time. For existing policies, it’s a good idea to add your new baby to your health insurance as early as possible, ideally within the rst three months after birth. This is the grace period where you can add your baby without providing any medical statements.

Adding your baby to your health insurance is usually a simple process of letting your health insurance provider know your baby’s name and birth date; there are no forms to ll in and, more importantly, no exclusions.

Keep in mind, though, that any medical condition your baby is born with or that may develop in the rst 90 days is considered congenital. Congenital conditions are usually excluded from a baby’s health insurance cover. 

Choosing health insurance

Generally, there are two main types of health insurance that offer varying levels of cover between the two. A major medical plan covers hospital and specialist cover only, but doesn’t cover day-to-day health costs. Comprehensive plans, on the other hand, offer a much wider range of cover, usually including major medical costs and day-to-day health costs like doctors’ visits, prescriptions, and dental.

When choosing a health insurance provider, the cost of your health insurance will depend on the number of people  included in your policy, the level of cover (major medical versus comprehensive), and any excess (the amount you would need to pay towards the cost of each insurance claim). If you choose a higher excess, you usually pay a lower premium.

Many health insurance providers offer additional family bene ts like low-claim rewards, discounts for two or more children, or paying child rates until 21 years of age, so it’s worthwhile shopping around and comparing family bene ts from a number of providers.

If you think that health insurance is the right option for you and your family, there are a few ways you can help contain your costs. Most health insurance providers offer discounts for those who lead healthier lifestyles, like non-smokers or those who exercise regularly, so live well and save.

Take advantage of group rates that may be available through your employer, or choose to pay a higher excess in order to save on your monthly premium. Get in early, because by taking out health insurance before you actually need it, you avoid being turned down for “pre-existing” conditions that can develop later on. 

Life insurance

When you’re just starting out as a young family, it’s hard to imagine anything going wrong. But the reality is, the income you earn, the house you live in, and even the health of your children could be affected if something happened to the income provider in your family. It’s important to know that your family is protected in the event of an unexpected incident. Life insurance not only provides your family with an income if you pass away, it also covers your mortgage or rent payments and your loss of income if you’re unable to work due to illness or trauma. 

 Choosing life insurance

When deciding how much life insurance you need, consider your personal situation and how much your family would need if something happened to either you or your partner, and you were no longer able to provide an income.

One rule of thumb is to ensure your life insurance provides between ve and 10 times your annual income. But everyone’s situation is different, and the amount of insurance you need will depend on the following factors:

  • How much your family spends annually on things like housing, food, and clothing. • How much your family would need to cover large expenses, like university fees. • How much your partner earns to determine how much of your family’s expenses are covered by their earnings.
  • How much your investments and other assets are worth.
  • How much debt you currently have.

With any life event – marriage, a new baby, divorce – it’s important you review your existing insurance to ensure you’re suf ciently covered or not paying too much for life insurance you don’t actually need. Any change in your life is a signal it’s time to review your life insurance.

It’s a good idea to talk to an insurance adviser about your personal situation, and compare life insurance policies to ensure you’re getting the right cover for your particular needs. 

Trauma or critical illness cover

Suffering a serious illness is understandably devastating. But having to deal with the nancial burden of trying to provide for your family while you or your partner is ill can be a far greater strain. In most cases, someone who suffers from one of the four main illnesses (heart attack, heart disease, cancer, or stroke) can survive for years beyond the critical incident, but in many cases won’t be able to work. That means a significant change in the family’s lifestyle. A trauma or critical illness insurance plan provides a one-off lump sum if you are diagnosed with a qualifying critical illness event. The plan can be purchased either in conjunction with a life insurance policy where a claim will reduce the life cover, or on its own as a stand-alone benefit. 

These policies usually cover around 35 medical conditions including heart attacks, strokes, and cancers, any one of which may disable you for a period of time or permanently. The lump-sum payment can be used to cover your loss of earnings if you are unable to work, help fund additional medical care you may need, pay for home help or childcare, fund necessary modi cations to your home, or simply be used to pay off debts like your mortgage.

You decide on the level of cover you want to be paid out to you in the event you suffer a qualifying critical illness or trauma, and your premiums will be calculated accordingly. There are usually a number of optional features to these plans like a funeral bene t, additional cancer bene ts, and a children’s benefit.

Although children under the age of 16 can’t be covered by life insurance, there are a number of insurance providers that offer children’s trauma and illness cover that is designed to help pay for some of the expenses you would incur should your child have a major illness.

Along with paying your medical expenses, this type of policy also protects your income should you need to take time off from work to look after your child. So your mortgage or household bills are covered while you focus on treatment and recovery. Children can normally qualify for this type of cover from age one up to 21. 

Future insurability

Now you’ve arranged insurance cover for you and your partner, consider your child’s future insurability by securing their future ability to take out life insurance. Many insurance providers offer an option to have your child pre-approved before they turn 15, so that when they reach a certain age or a speci c event happens, like getting married, they are guaranteed to be able to get life insurance. Even if they develop any severe illnesses during their childhood, it won’t impact their insurability as an adult.

In return for a fairly low premium each month, you’re able to lock in your child’s future insurability option, without them having to provide any medical, financial, or occupational information if they opt to take out a life insurance plan. It’s a little bit of foresight that helps protect your child’s future and family.

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