Infographic: The Reality of Life

12. February 2016 08:48 by Kelly in   //  Tags:   //   Comments (0)

This infographic from LifeHealthPro shows life insurance buys vs needs.


Policy Wordings in Quotemonster

11. February 2016 11:25 by Kelly in   //  Tags: , ,   //   Comments (0)

There are a number of ways to view policy wording extracts and full policy documents in Quotemonster:

Policy wording extracts

If you are wanting to look at the policy wording for a particular item you can view it in Step 3 'Compare Insurers' on the 'Research' tab. The list of items down the left hand side are links - to get the policy wording for a particular item click on the link. You can scroll down and see the wording for that particular item for each insurer that offers it. The first line of wording is a reference as to exactly which policy document it has been pulled from and the date, page and section it can be found in.




















Full policy documents and brochures

To download a copy of the most recent policy document or brochure for a particular benefit you can click on the 'Documents' tab on Step 3 'Compare Insurers'. You must be quoting the benefit you want the document for.












Full legacy policy documents

To access our policy document library archive which has around 500 policy documents in it, both legacy and current, you click on 'Policy Wordings' on the logged in page. You can then select documents based on company name, effective dates, or by benefit.

Why Can't I see the Banks on Quotemonster?

11. February 2016 11:19 by Kelly in   //  Tags:   //   Comments (0)

There are a number of reasons why you may not be able to see the banks on Quotemonster or in the pdf reports.

  1. We don't offer the premiums for the banks on Quotemonster and therefore you will only be able to view banks if you subscribe to QPR.

If you are using QPR and can still not view the banks it may be due to either of these:

  1. The banks may not offer the product or options that you are quoting on. For example, a number of the banks do not offer Standalone products, they only offer Accelerated so please ensure the banks offer the products you are quoting.
  2. You have to ensure that you select the banks in "Step 3: Compare Insurers" in the "Research" tab. There is a drop down box labeled "Select More Companies" which lets you select which companies you want to appear on your report. Make sure you select the banks here and click 'Save'.

If you are still having issues please feel free to contact us on (09) 480 6071.

Highlighted Issues in Insurance Advice

11. February 2016 08:49 by Kelly in   //  Tags:   //   Comments (0)

These are some of the big issues we think need to be borne in mind when writing your submissions on the MBIE options paper. 

Advice versus non-advice – when is financial advice not advice and how could you tell? A person conducting a no-advice sale is permitted to have the term ‘financial adviser’ on their card and may not be as careful as they should to make limits on their service clear. Conflicts of interest in the sales process were identified in the FAA/FSP review. We would like to see other aspects tidied up. Linking those two issues is the question of how different sales are regulated.

Labeling advisers. We like the idea that if you are selling the same product in the same way the same rules should apply. That recognises that a direct and no-advice sale is different to a full personalised advice sale.

Data to inform customers, such as what the policy covers, and quantifying the impact of different definitions. If a benefit is rarely paid, and we know that, we should tell the client, as we do when we focus on the main benefits in a policy. That is consistent with the principle of utmost good faith and recognises the information asymmetry that both insurers and customers grapple with. If we expect them to disclose everything about their side of the bargain (health and financial data) we should be disclosing from our side. Comparing the cost of distribution is a big headache, we should be disclosing commissions, we probably should be doing more fee-based business, we should also be disclosing other numbers: the claims rate as a percentage of premium, for example, which is distribution channel-neutral. 

Complaints – they are low, but there are some worrying areas, particularly a ‘contingent liability of undiscovered complaints’ from poor switches, done by all channels, but more likely to be undiscovered in ‘no advice’ channels

Consumer protection - Consumer right to know: to get a quote, look at a policy, ask questions, and know if they are being given advice or not, choose better products, choose less good products, more of worse compared to less of better, greater scope rather than better quality.

Consumer Perception – the FSC campaign to raise awareness on Income Protection products is a big part of correcting some of the issues in consumer perception. We could do a lot more of this. 

What Consumers Buy versus What Insurers Think They Should - Typically a $1.3 million gap

10. February 2016 08:10 by Kelly in   //  Tags:   //   Comments (0)

I doubt whether there has ever been a bigger gap between what insurers think you should buy and what consumers actually buy. This is the size of the disconnect: One insurer's life cover calculator quickly gets the recommended cover amount over $1.5 million, yet $500,000 is what most advisers start quoting, and consumers typically buy $200,000, usually from their bank. 

The difference in methodology is astonishing.

Usually lump sum benefits are easy to assess: how much to pay off debt, create an emergency fund, and pay for the funeral - all numbers that can easily be suggested by the insurer, or supplied by the consumer, then add them up. The trick comes to 'other' things, the leading category appears to be funding the children's education. This is an emotive subject, and therefore ideal for discussion around the risk of early death. What better to leave your children than the gift of a good education? A shared goal of many parents is to see their children safely through a degree with no student debt. Do that and few people could say you have failed. Another leading contender is funding retirement for the survivor - leave your partner set up for retirement must surely rate as another worthy goal. So the calculators invite you to add all that up. It quickly gets expensive. Then the calculators invite you to work out how much income you would like to replace, for how long. 

There are problems with this approach are more in what it does not do, that what it does: 

  • It nearly always places life cover first as the main need, yet disablement is far more likely than early death, and in many cases more financially damaging.
  • Since a third of income typically services debt it is surprising that the calculator offers no suggestion to reduce the ongoing income to replace by the amount of mortgage repayments saved from the repaid debt. 
  • Since education is usually funded out of income a similar - but slightly different - trade-off should be envisaged for ongoing income with that number too. 
  • Pre-funding retirement income for a survivor is likewise going to reduce the call on their income - sometime substantially. 
  • I thought that a calculator should make it easier to understand, not harder. By treating these items as separate, not goals that could all be met from future income, it is easy to arrive at silly numbers. 

But if you want a really silly number, try the consumer's approach to setting their life cover amount. Unaided, when I ask them, they come up with two methods: take the home loan and divide it by two (there are usually two incomes these days). Alternatively they ask a friend how much they have and discover, more often than not, that they have about $200,000. So they buy that too. They don't even contemplate income protection. 

The real problem with this method is that in most of the bigger towns and cities in New Zealand it means that the insurance package will fail in what I think is the baseline test: do you get to keep the house? It will fail if one of the income earners is disabled (more likely) or dies. 

Important Industry Numbers

9. February 2016 08:15 by Kelly in   //  Tags:   //   Comments (0)

The value of in-force risk premium at the end of June 2015 was 2.233 billion, up from 2.115 billion (including WOL and group insurance, excluding them it’s about 1.986 billion, but the gain was similar) for a total gain of over 5%. That is pretty good when inflation was under 1%, and economic growth is about 3%. The industry is therefore growing at a substantially faster rate than the economy as a whole.

Insurers fret that the growth is confined mainly to increases on the premiums for cover already in-force, rather than increases in cover amounts, or increases in the number of people covered. That is a legitimate concern. Merely increasing premiums for the group of people that have insurance is not helping to get more of the people that do not own any insurance better protected - that is another important issue.

2015 was a very busy year: 24 products were re-priced in the year and 45 products had wording changes from minor technical things to meet new legislative requirements to major product upgrades. We do not expect that 2016 will be slower. 

Life Insurance in the Digital Age: It Would be a Good Idea

5. February 2016 08:11 by Kelly in   //  Tags:   //   Comments (0)

Swiss Re's report on life insurance in the digital age includes many gems, you can find it at this link - do read it. Some highlights include: 

  • Just how much the life industry lags behind others in satisfaction scores compared to other industries around deployment of digital technology
  • The importance of collecting good data throughout the business and using that well. Insurance has collected richer data than most other industries and yet few use less in an effort to create better customer engagement than we do. 
  • But in other area it seems light: the poverty of ambition in the quoted examples of adopting automated underwriting systems is shown up by several much better systems I have seen recently. 

Fixed Term Life Cover Enables the Coverage of People with HIV in the United States

4. February 2016 08:34 by Kelly in   //  Tags:   //   Comments (0)

This article on LifeHealthPro website explains that last month Prudential Financial began offering 10 and 15 year term life insurance policies to people living with HIV.

This is interesting. Essentially these folk have figured out that in very many cases people treated with the current basket of retrovirals and other tricks can live a long time with HIV. What is even more interesting is that this approach could be used with all sorts of other forms of long-term, chronic, disorders that will probably shorten life, but can be managed for a long time. I wonder if this approach could be adopted more often in New Zealand if we did not have such a fixation on a product which is, in effect, renewable indefinitely - but actually held for much much shorter periods. By removing the right of renewal at a fixed and known point coverage can be issued for lots of people, and they can get on with their lives in the meantime. 

Crowdfunding is Not a Replacement for Life Insurance

3. February 2016 08:16 by Kelly in   //  Tags:   //   Comments (0)

Apparently creating a fundraising page to fund funerals or support family members after someone's death is becoming increasingly popular. The average amount raised on funeral, memorial and tribute pages on fundraising site GoFundMe is $2,200 USD.

"No Life Insurance, Help Spouse" is the headline on a current GoFundMe page set up after a woman's husband died while ziplining in Costa Rica, the page has currently raised $7,495 USD. Just think how even just $50,000 of life insurance would have made a huge difference to them - and it is typically available for less than a dollar a day. 

Click here to read more about the craze of crowdfunding and how although a few thousand dollars can help out surviving family it is well short of the kind of meaningful aid that would have been provided by a life insurance policy.

Southern Cross Announces Insurance Benefits Not Seen Before in NZ

2. February 2016 08:28 by Kelly in   //  Tags: , ,   //   Comments (0)

Southern Cross have recently made this announcement about new additions to their policies with a benefit not yet available in the country.

New Zealand’s largest health insurer Southern Cross is adding an allowance for prophylactic treatment and increasing the surgical claim limit on most of its plans.

Prophylactic or preventative treatment is treatment undertaken to prevent a disease or illness from occurring where there’s an identified high risk – recently made prominent by Angelina Jolie, who had her ovaries removed and a double mastectomy due to the BRCA1 gene mutation linked to breast and ovarian cancer.

Southern Cross Health Society is the first New Zealand insurer to offer this benefit as part of its plans.

Head of Product and Marketing, Chris Watney says, “Genetic testing can identify a person’s increased risk for developing a life-threatening condition and is changing the way people look at their health.

“If it’s highly likely a condition – such as breast cancer or ovarian cancer – will develop, prophylactic surgery can be recommended as the best course of action. We want to support members in this difficult decision and give them more options.”

The prophylactic benefit is a lifetime allowance that ranges from $30,000 to $50,000, depending on the member’s plan.

Gift of Knowledge, a national charity and support network for New Zealanders affected by hereditary breast and ovarian cancers, has called the new benefit a “big step forward in recognising prophylactic surgery can be life-saving”.

“Every day we see families deeply affected by illness and loss from these cancers. While prophylactic surgery is never an easy decision for anyone to make, we applaud Southern Cross for supporting their members and leading the way in offering this as an option,” says founder Nicola Coom.