Cost Of Living Meets Insurance Stress

SPEAKER_00 0:10

If you're worried about the cost of living and the rising cost of insurances, this is the episode for you. So listen up. Hello, Blake.

SPEAKER_01 0:17

Hello, Zibaniso.

SPEAKER_00 0:18

Long time now have you in the studio.

SPEAKER_01 0:20

I'm back out the coast.

SPEAKER_00 0:22

Yep. Awesome. Thank you so much for coming across. Today we were touching base on a really important topic on people's minds. All right. People are worried. Things are getting so, so expensive. And insurance is often one of those unseen costs. What are you paying for? And that's usually the one that people cancel the most first. So uh I'm keen to hear your thoughts on this topic, and I'm keen to hear what you've been seeing in the industry and what your clients have been facing, and how do you deal with that?

The Risk Of Cancelling Cover

SPEAKER_01 0:55

Yeah, I mean, it is it is a very hot topic. I suppose being in the industry for 13, 14 years now, you do see a lot. Post-COVID, the cost of living has come to light into the forefront in people's minds more so than ever. And I think that's become more apparent every year post-COVID. So last year, last year for myself, I think was the biggest amount of not so much cancellations, but alterations, which is people trying to reduce cost while keeping important cover. But there is also that small percentage of people which just cancel cover outright, sometimes without any without talking to you, because they just feel they can't manage it anymore.

SPEAKER_00 1:39

Which hold on, and that's the most dangerous one, isn't it?

SPEAKER_01 1:42

Of course it is, yeah.

SPEAKER_00 1:43

The most dangerous people can can do right now is to go and cancel without talking to us first.

Suspension Options And Premium Holidays

SPEAKER_01 1:48

Yep. And then you've got to remember why you considered insurance in the first place, because it was important to your financial security, and for most people that bounces back to their family life, and keeping the house that they live in the roof over their head. So you've got to remember these things, and part of having an advisor, and why it's so important of having an advisor, is we know how to restructure cover, we know how to make alterations which can sometimes reduce your cost but still keep an important cover. And there's numerous ways of doing this. Most insurance companies now have come to the party and they have suspension options. Some companies are better than others when dealing with suspensions.

SPEAKER_00 2:32

Hold on a second. What is a suspension cover?

SPEAKER_01 2:34

Sorry. Suspension cover just means you can suspend portions of your cover. So let's say you've got life insurance and income protection. You suspend your income protection because you can't afford it, you don't want to cancel it. By suspending that, it means you're not covered for the income protection product. Well, it's suspended, but it might give you three, six, maybe twelve months worth of a premium holiday. So therefore, things get better after a year, you're more financially stable, you don't have to reapply for that insurance again. You can just press go again.

SPEAKER_00 3:11

But what if something does happen and people do need to make a claim?

Underwriting Risks When You Restart

SPEAKER_01 3:14

In that situation, that's the risk that you could be taking, hence why it's important to number one, understand those choices clearly, but keep some of your cover in place and don't suspend everything. Or what other people are doing is canceling everything. So those conversations with your advisor or someone who's very knowledgeable in the industry become even more important.

SPEAKER_00 3:37

Because can I just take you back a step? A lot of people don't realize when we say things like, hey, you can suspend it and then you can restart it, instead of canceling, what it means is that that whole underwriting piece behind the scenes, right? The medical stuff that's so, so super important. Because if people just cancel it and then decide to get the cover again a year later because they suddenly got a much better paying job, it means they have to go through the whole medical underwriting all over again. And if something happened to them between, you know, the last 10 years, they may no longer be covered for those items. But if there was part of your cover already, and when you suspend it and then restart it, you don't necessarily have to go through the whole underwriting again.

SPEAKER_01 4:21

That's that's exactly one of the main points outside of taking the financial burden away for a little bit, is being able to keep the cover in place with the same terms that you had when you applied for it, be it last year, five years ago, or ten years ago. And the longer time you've had that cover in place generally means the more likely but the more likelihood the terms that you have might be unachievable just because of the prolonged period of time and the nature of medical uh situations happening to you.

SPEAKER_00 4:52

Yeah, yeah, yeah. Super, super important, guys. So for those that are struggling with the repayments or keeping up with the repayments, don't just go and blindly cancel it. Talk to an advisor. Yep. There might be options.

SPEAKER_01 5:05

There's always options.

SPEAKER_00 5:06

And I guess the other thing you've been seeing as well is reducing those covers.

SPEAKER_01 5:09

Yep.

SPEAKER_00 5:10

As people age, they might not need 500k life cover anymore because the mortgage is no longer 500k.

Level Premiums Versus Stepped Premiums

Where To Find Blake

SPEAKER_01 5:17

And that's that's really true. Sometimes it can be hard to get back in front of existing clients to review because people have put it in place, they know they're covered, that's great. But if you don't keep up with biannually at the least reviews, you could be paying for insurance that you don't need. You might be overinsured because you've paid off half your mortgage, but you've still got X amount, which you don't need cover for. So just having a normal review of your insurances in your current situation can also lead to savings. It's just about getting the good advice at the right time so you can be confident in your decision moving forward. And if at the worst case you still want to cancel it all, I mean, well, that's up to you, but at least you've been able to make an informed decision. But another really good way and where if your cover is structured correctly, which can save you money long term, is having what they call level premiums. So, in lieu of a better word, level premiums are what they call fixed premiums. Fixed cover. So if it costs you$100 today, it costs you$100 in 20 years for the same amount of cover if it's fixed with no inflation. So that's always important to consider your options when you are talking to an advisor. And if you're not getting the advice around stepped and level premiums, ask. Or find someone that does, or talk with me.

SPEAKER_00 6:38

Where can people find you, Blake? People can find me but from my house. She doesn't live here.

Claims Reality Check And Why Reviews Matter

Mortgage Rates And Budget Breathing Room

SPEAKER_01 6:47

Uh Ridgeline Insurance. Yep. So I'm sure we'll be able to tag my email address in. Yep. Yep. So yeah, I'm always happy to talk with people. Most of the time it's just a discussion, like much like Zebonisa and I are having now. And from there, it becomes pretty apparent if if we need to talk further. And there's not many people that you can't add value to. And I've I pick up a lot of clients over the years who don't have an existing advisor, or maybe that advisor's retired, or they've just haven't been looked after for quite a long period of time. And for all those people that you do pick up along the way, there's so much value add to your situation. And without repeating myself, it's just so important to get your cover reviewed. The last thing you want to do is find yourself actually making a claim in the future, and the benefits that you receive at that time fall short of what you actually need because you've never actually had it reviewed. And I guess more to that point is when people, through my experience, when people actually claim that's when it gets real, right? Yeah. And whatever they receive is never really enough because all of a sudden things are in perspective, your life's turned upside down. So having insurance at the right level can be quite hard to get your head around when someone's offering you those situations, sorry, those options when you first talk. Circling back around to my point, it's important to review to keep on top of your cover.

SPEAKER_00 8:20

Okay. So one thing that people can do right now to take back charge on the whole cost of living increase is sit down, review the insurances, see if they can make any savings. And we actually talked behind the scenes is that what I'm seeing, because the rates are actually okay at the moment in interest rates, a lot of my clients are shifting from 6.5% interest rate to four and a half interest rate. So instead of canceling their cover, maybe suddenly they've got that extra money in their budget to keep those covers in place instead of canceling them because the mortgage rates have gone down and their repayments have gone down. So there are different ways we can help our clients to combat whatever is going on in the world. Yep.

Advisors Working Together For Better Outcomes

SPEAKER_01 9:04

And I think that sort of reiterates the point of having an advisor for your lending, like yourself, and an advisor for your insurance needs who know each other and can collaborate to give you the best outcomes for your lending and your financial security.

SPEAKER_00 9:20

Yeah. Yeah. That's the thing, right? We've got to sort of hold hands. There's three of us in this circle, it's me, you, and an investment advisor, you know, like for people's future, for people's present and for people's past. It's sort of like it's all comes together in a way, and we just want them to do better in the future as well. Awesome, like, thank you so much for coming along and good to have you back.

SPEAKER_01 9:42

Nice to be back. Doc soon.