INSURANCE FOR PROFESSIONALS

As with all types of insurance, the recommended amount of life cover will be highly specific to you and your circumstances. There is no one-size-fits-all. For professionals and potential business owners, the amount of life cover required will often be calculated based on what your family would need or what your business would need to maintain financial stability and wellbeing.Common considerations which would be included in these calculations:Any outstanding debits your family or your business might have. This includes but is not limited to; outstanding mortgages or personal or professional debits such as business loans.Income replacement should you not be able to work, or if you pass away. This is typically calculated as a lump sum to clear debt and support dependents until they reach independence.Any future expenses you predict your dependents will require.Death expenses such as funeral costs or estate costs. Once these financial obligations have been calculated, any assets you may have would be subtracted as these could be used to meet the needs of your loved ones. A financial adviser would take this calculation further by considering inflation, any investment returns and any earning power any of the beneficiaries have. This would generate a precise figure that would be suitable to protect your beneficiaries.

A key factor in all Total and Permanent Disability (TPD) cover is how the policy defines “disability”. This will affect what and if you can claim. As trained professionals, being able to work your job verses being able to work any job, will likely result in large pay gaps. That’s where own occupation cover and any occupation cover becomes important.Own occupation cover: This is the gold standard and what professionals should generally be aiming for. This type of cover will mean you are eligible for a policy payout if you are totally and permanently unable to perform the specific duties of your profession due to illness or injury. For example, a cardiac surgeon might not be able to continue in that profession should they develop a hand tremor. They might be able to seek alternative employment in the field, such as consulting or teaching, but they would no longer be suitable for surgeries. In this case, own occupation TPD would still cover them. This highlights how highly trained or specialised professionals should consider own occupation TPD. Any occupation cover: this policy type has a higher claim threshold. You will only meet the threshold if you are unable to work any occupation, regardless of what your profession is. You will only meet payout criteria if you are unable to work any occupation, for which you are reasonably suited due to your training and experience, due to permanent disability. Using the same example as before, the surgeon might not qualify under this policy as theoretically, they could work as a consultant or another medical professional.Using the examples above, it is clear to see how the definition of ‘disability’ becomes important when deciding on the right cover for you. Highly skilled professionals have invested years of training in their specific field making own occupation cover the most suitable choice because it would protect your ability to work in the field you have been trained for, as supposed to your ability to work at all. Due to the more reasonable claim threshold for trained professionals, own occupation cover is likely to come in at a higher premium. Talking to a financial adviser will allow you to weigh up the costs of specific cover against the protection it could provide you and your loved ones if your specific circumstance were to change.

One of the most critical, and often misunderstood, settings on an income protection policy is the stand down period and the benefit period, and how they work together to determine your premium and how your policy will protect you. The stand down period (sometimes called the waiting period) is the period of time illness or injury causes you to be unable to work before your income protection payments kick in. Stand down periods range in length and choosing longer stand down periods (having to wait longer until your policy starts paying) will often lead to lower premiums. Lower premiums may seem appealing but you must have the ability, in sick pay or savings, to fund the period of time between your inability to work and the benefits starting. A common model to base this decision off is matching the stand down period to the financial buffer you can calculate with your adviser. The benefit period is simply the amount of time your policy will pay you benefits once you are on claim. Most policy options will include either a set term, for example 5 years, or will pay you until an agreed age, such as 65. Longer benefit times offer more comprehensive protection but they will come at a higher premium. How do you choose the right balance for you? The balance of these elements comes down to cost verses security. Shorter stand down periods and longer benefit periods will give the most comprehensive protection. It will also come with a higher premium. The best approach is to balance decisions on income protection with any other forms of insurance you might have. This is where talking to a financial adviser becomes invaluable. They can use sophisticate modelling techniques to map out your personal financial landscape so you can maximise your coverage for the best value. They will look at your personal savings and circumstances to see if longer stand down times can lower your premiums, particularly regarding accidents which would have a level of ACC coverage for a time. They will also assess the likelihood of chromic illness preventing you from continuing in your field. In this case as longer benefit period might be more appropriate.

The most important distinction to understand is that private cover and public healthcare system cover different things. They actually work best in tandem together to ensure full coverage for your wellbeing; one is not designed to replace the other. There are a few key differences between these systems that explain why it is important to understand both. ACC covers injuries that occur due to an accident. It works on a 'no fault' principle meaning everyone has access to ACC, and no third party can be forced to provide compensation for personal injury damages. It will not cover ordinary sicknesses or illness. This leaves a massive gap in your care, which you would ideally protect using private health cover. It provides cover for illnesses and other non-accident related conditions. Private health cover can offer several benefits for professionals including:By passing public system waiting times. Most policies will give you access to doctors and specialists not available through the public system. With fewer people waiting for treatment, time to get seen is reduced. This can get you the treatment you need and put you on a faster path to recovery and return to work. Access to different treatment and drugs. The public system is restricted to government funded drugs which results in a narrower range to chose from. Sometimes, there could be a treatment which has a greater success rate at treating your illness but you won't have access to it through the public system. Private health cover gives you access to Non-PHARMAC drugs. This can make a big difference to your treatement outcome, especially with such illnesses as cancer. More treatment options. Again, you are not restricted to publicly available services. Private cover give you access to more options and newer technologies. For a professional who may work in a less physically dangerous environment, the most significant risk is often not an accident, but an illness like cancer or heart disease. Since ACC won't cover illnesses, health insurance is the primary tool to ensure you get the fastest and best possible care, allowing you to recover and return to work sooner.

Terminal illness benefits are likely to be a part of a wider life insurance policy and although standalone terminal illness cover is rare, not all life policies include it either. If terminal illness cover is important to you, make sure you choose a quality provider and confirm it is an included benefit in the cover. Now, assuming you ensured terminal illness cover as part of your insurance landscape, the process of claiming this benefit is designed to be straightforward and compassionate. There are three main stages to the process: The diagnosis. A recognised medial professional will need to provide you with a diagnosis which is likely to cause your death within a pre-specified timeframe, usually within 12-24 months. This is when you can begin your claim. Fast-tracked claim process. Due to the nature of terminal illnesses, time is of the essence and most will fast track claims so payouts can be received within a matter of weeks of diagnosis. Some insurers will even advance a portion of the benefit at diagnosis to help cover any immediate costs. Lump sum payment. The policy will payout one lump sum payment as per the policy agreement (except for any advanced payments mentioned in point 2) and then the policy will end. Unlike trauma cover which can pay a set amount and be claimed again in the future. What can you use your lump sum payment for? Are there any restrictions? Unlike other policies which may reserve the right to restrict how your benefits are spent, terminal illness cover has no such limitations. It is yours to do with what you want. Some of the more common uses include:Paying off debt, especially if you do not have any other policies that will cover this for you. Replace income. You can use it to cover lost income and pay household expenses if your are forced to stop working. Secure your family's future. Put the money towards a dependent's future education or set it up as a finacial buffer for your loved ones. Fund your bucket list. Take your family on that dream holiday, have those magical experiences or achieve any other personal goals or dreams you may have. Use it to pay off medical expenses. Again, this will vary depending on any other policies you may hold. If you do not have any other means to cover your medical expenses during your final months, using this payout will limit the debt you may leave behind for your loved ones. The key takeaway here is that terminal illness cover is designed to give you and your loved ones peace of mind during an incredibly challenging time. It is there to alleviate stress and hopefully give you the freedom to enjoy the time you have left with your family.

The loss of a key person to a business can be devastating, whether they are an owner, director, an employee with unique skills or primary client relationship owner. This is particularly true for New Zealand's SME's (small and mediums sized enterprises) as research has indicated that more than half of all Kiwi SME's would struggle to continue trading a year after the loss of a key person. The financial impacts of losing a key person can be sever. Below are some of the immediate impacts a business might face;The obvious one, loss of revenue and resulting profit. That key person may have been a unique revenue stream for the business. Without them, this stream is lost. A new person could be recruited or trained to support this stream in the future, but immediate impacts would be felt first. Recruitment and training costs. As mentioned above, if this key person generated revenue, the business will be motivated to replace them asap. Assuming their skill level was high as a revenue generator, finding or training a suitable replacement would require investment in both time and money. Lost client confidence. If this key person owned many of the client or supplier relationships, the loss of this person could shake their confidence and could possible result in lost contracts. Debt repayment difficulties. If the business has debts to repay, they might struggle to service these debts with a key revenue generator missing from the business. How can Key Person Protection cover help?Key Person Protection is a type of policy the business will take out on the life of that key person. Despite the key person being the focus of the cover, the business owns the policy, pays the premiums and is the beneficiary. In the unfortunate incidence of the key person passing away, being diagnosed with a terminal illness, or serious illness or injury, the policy pays out a lump sum directly to the business.