Setting goals for the new year? This is traditionally the time to step back, reflect and plan for the future. And with 2020 having been the year it has been, your priorities may look quite different than they did just a few months ago.
For example, after seeing how quickly things can change, many people have become more risk-aware than ever before. Does that ring a bell? If so, running a bit of a gap analysis over your financial life can help you start the year with confidence and a positive mindset.
Read on for some good tips and questions to ponder, covering your most important assets – your health, your income, your family and your physical assets.
Is your health protected with an appropriate level of health cover? And if you don’t have health insurance in place yet, is it worth considering?
As New Zealanders, we’re blessed with a public healthcare system that takes good care of us in case of emergency. But when it comes to non-urgent treatments, patients mostly have two options: wait in line for quite some time (but not pay), or go private and pay hefty amounts to be treated sooner.
There’s also a third way, though, and that’s health insurance.
Health insurance can help alleviate the financial impact of a sudden medical expense, while also giving you faster, affordable access to private treatment. Some health insurance policies even provide cover for certain non-Pharmac funded treatments, including life-extending cancer medications.
Don’t have health insurance? Just like any types of insurance, it’s important to ask yourself what risks you’d like to protect yourself financially from. For example, you may want to fund major health costs down the line (like surgery), day-to-day things like your GP or dentist visits, or both. Health cover can help you fast-track your health, giving you peace of mind that you’re not going to be waiting around in pain.
If you do have insurance, how long has it been since your last review? As your life changes, so may your health insurance needs. Make sure you review your health cover on a regular basis, to check that there aren’t any gaps. We’re here to help.
Your ability to earn an income is your most important asset – the one that enables you to maintain your lifestyle and meet your financial commitments, including your mortgage if you have one. The key question is, how long would your family be able to cope financially if your income were to stop?
Earlier this year, the Financial Services Council asked the same question to 2,000 New Zealanders, as part of their Money and You survey. They found that one in three Kiwis could ‘survive’ only one month if they suddenly lost their income.
Looking at protecting your earning power? Setting aside an emergency fund can create a buffer between you and life’s mishaps. But if you’re looking for extra peace of mind, especially if you have big financial commitments to meet, income protection insurance may be worth considering. It’s designed to provide you with up to 75 per cent of your gross wage for a fixed period of time, after a specified waiting period, if you’re unable to work due to illness or injury.
Are there any other types of insurance to consider? Depending on your circumstances, other types of insurance may also be appropriate. Trauma cover, for example, is paid out as a lump sum upon diagnosis of certain serious medical conditions, and while you don’t have to be off work to claim on it, you can use the amount to take some time off without compromising on your lifestyle.
We’ve just seen how important it is to protect your income, especially if you have dependants and/or a mortgage. But if you’re seeking ways to protect your family’s financial future, you may also want to look at life insurance.
How long would your family be able to cope financially if you were no longer around? Would they be able to ‘survive’ on one income – or no income at all – for a while? What about mortgage repayments – would your family be forced to sell the home and downsize?
These are key thought-starting questions to assess your need for life insurance. And of course, if you’d like to understand your options in more detail, we’re here to help. We can also assist you with working out what an appropriate level of life cover may look like for you, depending on your needs, goals, and assets.
Need help with running your financial gap analysis? Please don’t hesitate to contact us – we’ll go through different options and scenarios together to ensure that your most likely risks are covered, giving you that all-important peace of mind.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.