How to protect yourself and your wealth with insurance in 3 steps

When building up our financial wellbeing and wealth, insurance is super useful. Yes – there’s a cost – but consider the cost of not having insurance when you really need it.

If you’re new to insurance, let’s decipher different types of coverage and make sense of complex policy jargon.

Step 1 – Understanding the different types of insurance

Wouldn’t it be easy if there was one type of insurance that covered everything! But if you’re overwhelmed by the amount of options out there, start with the basics. Common types of insurance include:

• Health insurance: health is wealth! In New Zealand, health insurance covers medical expenses that arise from using private healthcare, helping us access care quickly through the provider of your choice.
• Life insurance: this provides financial security for loved ones in the event of the policyholder's passing. It’s designed to replace lost income, cover funeral expenses, pay off debts, and maintain the beneficiary’s standard of living.
• Car insurance: this protects against financial losses resulting from car accidents, theft, or damage to vehicles.
• House insurance: house or homeowner insurance covers damage to the home due to perils such as fire, vandalism, or natural disasters.
• Contents insurance: or renter’s insurance offers similar protections for tenants, covering personal belongings and liability in case of accidents.

Travel insurance, income protection insurance and pet insurance are other types of insurance that can be useful too.

Once you’re aware of the policies available, take stock of your personal situation and think about what you would like covered if the worst were to happen.

Step 2 – Selecting the right level of coverage

Insurance goes well beyond a one-size-fits-all approach. Providers offer varying plans and levels of coverage to suit your individual needs, finances and levels of risk tolerance.

Important things to review when choosing a plan are:

• Your own priorities: if you have no dependents, you may not consider life insurance a necessity, but if you own a home and a car you will want those protected.
• Policy features: with each policy you’re considering, look at its features and exclusions, maximum claim levels, excess, or co-payments, and waiting periods.
• Your budget: ideally, we’d all have insurance for everything relevant to our lives. However, this isn’t always realistic. Make sure that the areas at the top of your priority list are covered first.
• Research providers: Don’t just sign with the first company that pops up on Google. Research each company’s financial strength rating, length of operations and reviews. Your best pick will be a reputable insurer with a solid track record.
• Shop around: if you find an insurance company offering a lower premium, don’t be afraid to show another company that quote! They may match it. Many companies also offer discounts for taking out multiple policies, getting you better value for money.

Step 3 – Learning how to navigate claims

Signed on the dotted line and now you need to make a claim? A few tips can make this process easier and save you from back-and-forth with your provider.

• Download your insurer’s app: many companies now have apps that help you manage your policy and claims. This can make the process quicker and more accessible.
• Brush up on your policy regularly: sometimes your provider may change terms when your plan is renewed each year. Before you pay for something you plan to claim for, double-check it’s going to be covered.
• Keep the receipts: when you make a claim, your insurance company is going to want receipts! For a smoother claims process, create a file of important documents including your policy, receipts, claim forms and correspondence with your insurer. To be extra safe, have digital and hard-copy versions.
• Always make your claim as quickly as possible: following your insurer’s guidelines on what you need to include to have your claim paid out without a glitch.

We work hard and deserve financial wellness – so don’t leave yourself vulnerable to life’s unpredictable twists and turns.

The right kinds of insurance can act as a comfortable financial cushion, protecting our financial wellbeing, ourselves, and our assets.

The above article is general information and does not purport to give financial advice. The Mercer KiwiSaver scheme and Mercer FlexiSaver are issued by Mercer (N.Z.) Limited. Product Disclosure Statements are available free of charge at seatatthetable.co.nz.