We all want to plan for our family’s financial security and future. Part of this process involves ensuring that our beloved family does not have to go through struggle and hardships in the event of a spouse’s death, a parent’s death, or our death.
“This is why getting life insurance is a crucial part of everyone’s life.”
It can provide protection and security in plenty of ways, such as helping to pay for education for dependent children, your house mortgage, or fund your retirement. However, understanding life insurance and purchasing from the right agency can be confusing, and too many people think that life insurance on its own will provide enough protection- whereas in reality there are many situations where this will not be enough.
It is incredibly important to ensure you have sufficient and correct cover before you actually need it- you don’t want your coverage to fall short in the unexpected event of your death, leaving your loved ones with financial difficulties at what is already an emotionally difficult time.
Therefore, there are many factors to consider when choosing life insurance, and a trusted and experienced financial advisor can help you navigate these, as opposed to buying straight from an insurance company.
Here are just five of the many reasons why you should use a financial advisor.
1) A financial advisor can advise you on the amount of coverage.
When purchasing life insurance, it is important to assess your options thoroughly, and this includes the level of coverage you will receive. A common mistake most New Zealanders make is buying too little life insurance. As a result, their family doesn’t receive adequate coverage.
In the unexpected event of your death, your family should have sufficient funds to be able support themselves and any outgoings you have left, such as your mortgage and any debt you may have. This is not a one size fits all amount, therefore it’s really important to discuss your needs with an experienced financial adviser who fully understands you, your family, and your financial situation.
When deciding how much insurance is right for you and your family, you have to consider a number of factors. If you own a business, you may also have to consider how your passing will financially affect the company.
Other factors include:
• Your Debt: Your outstanding debt is a crucial factor in deciding how much insurance you need. Will your family be able to manage your debt without you?
• Your Dependents: How many kids do you have? Who depends on you for financial support? Is your spouse working?
• The Age of Your Children: If your children are independent and can support themselves, you won’t need as much coverage as you would if you are supporting them, particularly if you have a young family.
• Funeral Costs and Time to Emotionally Deal: Funerals can be expensive, with the average funeral in New Zealand costing $8000-$10,000. If you aren’t sufficiently covered for this, this can add further distress to your family at what is already a taxing time. You also need to ensure your family has time to adjust with their loss, both financially and emotionally, so discuss with a financial advisor how long this period may be and what level of cover you need to support this
2) A financial advisor can advise you on the type of insurance you need.
Unfortunately, most New Zealanders think just life insurance is enough, when in reality, what would happen if an accident occurred, and whilst you were lucky enough to survive it, you ended up permanently disabled and unable to work?
How would this affect your family, your outgoings and your cash flow? And then there are added costs, such as rehabilitation facilities, alterations to your home and vehicle, and any future healthcare.
Therefore, it is also a good idea to supplement your life insurance with additional insurance- such as income protection, permanent disability insurance, and trauma insurance, so a trustworthy financial advisor will be able to assess your situation and discuss with you the level of protection you need.
You also need to make sure your premiums are manageable and affordable for your personal situation, so while in an ideal world you would be protected for all events, you may need to discuss which would be your must haves and which would be nice to have.
3) A financial advisor will ensure your insurance is tailored to you.
Buying your life insurance direct from a company may seem easy and straightforward- you can even do it from your couch online in the ad break of your favourite show these days. However, how do you know that the insurance you are purchasing is really covering your requirements?
Unfortunately, too many people buy an off the shelf product, only for it to fail them when they need it most. Therefore, discussing your personal, financial and family situation with an adviser will ensure they really understand you and your needs, and means they will be able to provide the level of cover that YOU need, not someone else.
It’s more than likely that an adviser will know more about what you need from life insurance than you do, after dealing with so many companies and cases.
4) A financial advisor will save you time and hassle.
Gathering quotes from several different insurance companies can be incredibly time consuming, and when you go to compare them, they may actually appear identical.
The whole process can be tedious, therefore using the services of a financial advisor will take the hassle out of the process for you. A broker can arrange all the insurance and risk protection you need, and probably only need one meeting to identify your needs, so they can develop a comprehensive insurance proposal for you.
5) A financial advisor can provide guidance in the event of a claim.
In the event of your death, your family and loved ones will be dealing with enough emotional stress, whilst grieving, making funeral arrangements, dealing with your personal effects, etc. etc., therefore the last thing they probably feel like doing is dealing with an insurance company, even though financially they may really need the support.
A financial advisor can step in at this time and take the reins of the situation, and help with the paperwork needed to lodge a claim as quickly as possible. The insurance company will need a range of documentation, such as a death certificate, proof of the life insured’s age, the policy document, probate or letters of administration.
In the event your claim gets denied for some reason, your financial advisor can work with you and the insurance company to attempt to remedy this- the average person simply doesn’t have the experience to navigate the complicated contracts, difficult wording and sometimes mysterious practices of insurance companies, and therefore a good adviser will fight for you, spending hours on the phone or in person to make sure everything goes smoothly.
If you want a review of your current insurance to ensure you are adequately protected in the event of your death, or if you don’t have life insurance at present and you want to talk to someone about the best option for you.
Please contact me on 021 283 5065, or book an appointment on my website https://samkodi.co.nz/contact/.