People all over New Zealand have been going over their household budgets in recent weeks, looking at what spending could be trimmed.
With warnings almost every day of an impending surge in unemployment, and many people being asked to take pay cuts while business activity is restricted, the prospect of a drop in income is starting to become a more real one for many of us.
One of your regular monthly expenses may be your insurance policies. If you’re worried about how you’ll sustain the cost of these, there are a few things you should know.
Don’t just let them lapse
The most important thing is not to just stop paying for your insurance cover. It might be tempting to try to save money this way – after all, your insurance policy is something you actually hope you’ll never need! But there is a very real risk that if you were to give up your policies, you might not be able to get something as good again.
That could be because you have developed health conditions since you took the policy out that you wouldn’t be able to get cover for anywhere else, or because the policies on offer in the market have changed.
Before you do anything hasty, give us a call to discuss it.
See what your insurer can offer you
Many insurers have recognised that these are unusual times and require some unusual responses.
Depending on who you are with, you may be able to access one of three things:
A premium holiday: This is where your policy remains in place but you do not have to pay anything for it for a set period of time. You’ll usually be required to show that you’ve suffered an income drop to qualify for this.
Policy suspension: If you don’t qualify for a holiday, or you need to put off your payments for a longer time, you could be able to suspend your policy. This means you won’t pay your premiums, but you also won’t have any cover. Also, any medical conditions that occurs while the cover is suspended may not be covered. Please check in with us to learn more.
Premium deferment: Another option is to defer your payments. You will still have to pay them, but you can choose to pay them off in a lump sum in a few months’ time or spread out what you owe over a longer period.
We can talk you through the merits of each of these options and what’s available to you. Also, please keep in mind that using any of these options could affect cover for health conditions that develop during the no-premium periods. The answer will vary across insurance providers.
Tweak your policy
There are other ways you can make your policy more affordable into the future.
For disability income products, you can opt to increase the stand-down period you’re willing to wait through before you receive a pay-out.
You may be able to reduce some of the benefits attached to your policy, or the amount of money you’re covered for.
If you’re worried about your household budget, get in touch with us today. There are a lot of ways to keep your insurance policies in place when finances are tight, but it’s important to understand how they all work. Give us a call to talk it through, we’re always happy to help.
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.