Mental Health - Not so much the resources but the funding

As an adviser, mental health comes up in discussion on a regular basis. Be it working through an existing application, discussing the terms of cover an insurance company has offered or dealing with a claim.

February 2015 saw the start of Malcolm Law's latest audacious challenge, 50 peaks and 50 marathons in 50 days in the name of Mental Health, fundraising and raising awareness for Mental Health foundation of New Zealand. A very audacious challenge indeed! More on this here 

This prompted me to have a closer look at what services are available and what funding and financial support for mental health exists for you, if you need it.

Something that often pops up in the insurance industry and media, but what does it really mean for you.

Over insurance is where you are carrying more protection than you need and under insurance is when you have less than you need.

This is not about you having insurance or not, it is about you having the right type of insurance, at the right level for your situation.

Looking at the numbers, most households will have some form of insurance. It might be House, Contents or Car cover, it may also be Life or Medical Insurance.

What the numbers do tell us though, about 80% of households, possibly higher, will have exposure if someone was to be disabled and 75% of you would have to use the public system for medical treatment, or pay your own way for private medical treatment.

A posting on LinkedIn got to the crux of this quite succinctly. If your business cannot run without you for 30 days, you do not have a business.  You have a J-O-B with a very expensive sign that has your name on it. When you can sit back and say ‘my business will work without me’, you probably have a strong business and a succession plan.

KPMG International’s 2014 Global Audit Committee Survey has highlighted some positive things about the management and structure of New Zealand companies, specifically around the role of CFO.

It has also highlighted issues with succession planning. When it comes to succession planning, New Zealand is doing just as poorly as the rest of the world.

Breast cancer, or for that matter any form of cancer, with women gets a reaction in the media. Breast cancer has certainly been the one that has had the majority of attention over the years.

2003 there were large headlines about the access to herceptin and it's costs, especially as the Aussies had access to it from an early stage. Here in NZ the budget of the time just didn't have the capacity to handle the cost. On the insurance side, there were only two medical insurers at the time able to offer cover, one that stopped not long after herceptin hit the market leaving 1 insurer providing non pharmac cover for new policies for nearly 10 years.

Now that we've got over most of the funding discussion on herceptin, it's partially funded rather than fully funded, other areas around cancer treatment are getting attention.

 If you own a business that makes or builds things then you are in for a year of changes.

Couple of big things going on:

Changes to health and safety laws and classification reviews for businesses and self-employed people.

Exclusions and policy terms, another good reason to regularly review your insurance coverage

An unfortunate fact of life is; time marches on and we all get that little bit older. This also means the policy you took last year, five years or ten years ago may not be quite as appropriate now as it was at the time you first took it.

A better question, do you want your things to go to those you care about and have your family looked after?

Yes? A will and good estate planning will help ensure this happens.

If you have good estate planning, it often means I can do better insurance planning for you. This often means you insure less and pay a lower premium.

Obviously, if you are laid off, but when is it going to be the most use to you?

Often there are comments redundancy protection is expensive relative to the cost of income protection. For those looking at income protection under the age of 40 this is often the case. Income protection pays up to age 70, redundancy protection only pays up to 6 months, with redundancy protection sometimes costing more than income protection for those under 40. Cost is relative, for a 50 year old it can be less than 25% of your overall cost of income protection even though redundancy protection premiums are the same for all ages.

Let's have a closer look at this picture.

You have a mortgage which is why you're probably asking this question, so the logical leap is you have a mortgage because you either don't have the financial resources not to or you wish to leverage your capital for the maximum return. Either way you have taken on a financial risk by having a mortgage.

If things go to plan and nothing happens to you or your property then the risk has not been realised, the question then becomes what if the risk is realised?

Mortgage Protection Insurance is how you go about mitigating this particular financial risk.

Another reminder in the business section on stuff today, if you are renting you are responsible for any damage. and it can be substantial if it all goes wrong.

If you're renting you need to have some level of contents cover. Ideally enough to cover the replacement of your possessions but more importantly cover for damage you may be liable for.

The health system is a bit like public transport. Something you take if you have to, but something you'd rather avoid. And just like the bus, it can be a pain to catch, sometimes it's right on time, most of the time it's full or you just plain old miss it.

Today's health system is markedly different from what it was even 5 years ago. It's starting to look like it's being rationed rather than provided as a free public service.

These articles highlight the plight of those subject to waiting for the public health system:

I have mentioned this before; banks are good at looking after your money and giving you ways to spend it. They are not so good about helping you out of debt or giving you insurance advice. This is especially so at the teller level, which is where a lot of bank cover is sold rather than advised.

For example, 'Thanks Mr Smith we've got your banking sorted, would you like insurance with that?'

You have heard it before, possibly not the best thing for you.

I call it the fries approach

Look before you leap. Aussie shopkeepers and Kiwi small business owners. Terms often used by people looking at our respective markets when looking at the predominant structures for trade and commerce.

Probably not too far wrong, New Zealand has one of the highest per capita self-employed rates in the world. Which is why I am focussing this posting on those of you who are employed rather than self-employed. Because employed Kiwis often have a change in situation and end up self-employed.

It oft be said, ’All my insurance adviser does is turn up and sell me more insurance’. While this may be true, I hope it's for the right reasons, you have more risk. This is the point, your risks change.

What is surprising is how people set and forget their insurance, be it life or property insurance. A great example is a past colleague who had not reviewed his contents cover since university, $40,000 then might have been a great deal, now a successful business owner with teenage kids it barely covers what's in his lounge.