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Premiums
But what is the real cost?
I recently had a single glass of beer and it cost me $9.00 Many of us have a paid cup of coffee every morning for $6.00. For many people, substantial insurance can be purchased for just $2-3 per day, or less.
I once had a meeting with a young couple with children who told me they could not afford $25 per month for insurance. That's OK I said. As I walked out the door they smiled, and told me they spend over $400 per month on cigarettes.
It's about priorities.
For many people insurance is not as expensive as one might think. When you bring it down to how much per day, it is often not that much to protect yourself and those you love. Even $1 per day will usually get some cover, which is better than no cover.
For most insurances, premiums start low, as premiums are generally based on Age. For example a 25 year old, female, non-smoker, taking out $200,000 of life insurance, the premium was 62 cents per day. At Age 40 the premium is 77 cents per day. At Age 50 the premium is $1.59 per day. At Age 55 the premium is $2.57 per day.
So the premium stays low for a long period of time, but then rises quickly as we get older. This is because the chances of a claim increase dramatically as we get older. To counteract this, most people, as they get older have a lower need for some types of insurance, particularly life insurance, so their level of cover drops as their need drops, which keeps the premium they are paying to a manageable level. For example a young couple with a mortgage might need $500,000 life cover each, but a couple nearing retirement might only need $75,000 life cover each.
This is why regular insurance reviews are necessary to determine what your current "need" for insurance is, and that can be balanced with your "budget" to pay.
Health Insurance is a little different. Many start with a Family Health Insurance Cover, then move children onto their own policy as they get older (21 plus). With Health Insurance excess levels can be increased to reduce premiums and added benefits can be reduced over time to keep premiums within budget.
Stepped Premiums start low and increase over the years. Level Premiums are available for some covers, they start higher but then maintain a similar premium over the years, only increasing slightly with inflation if that option is selected.
Many people meet with a Registered Financial Adviser every 2-3 years to review covers, needs, and premiums.