Interesting research out of Australia, yes I know Aussie. However, as our closest neighbour, most research has some value for insight or application in our market too.

What is interesting with this, is the insurance uptake across all products is generally better in Australia, with house car and contents being the most similar to us.

This research was specifically about insurance literacy, most of the time these reports are on investment or financial literacy or subject matter and insurance is treated as a by-line. Which for those relying on it, it is far from a by-line.

Ok, so what was the result?

In a nut shell poor to average. Which isn't good enough for people to make good decisions about their coverage.

The Riskinfo magazine article, and the associated report the article is taken from, list 46% of Australians as poor on the insurance literacy scale, with the self-rated knowledge to be average for 58.1% and poor for 21.2%.

Unpacking that for the moment, 21.2% know they have poor knowledge and of the 58.1% self-rated as average, about 24% of them are overstating their actual knowledge.

I am also going to throw in there, of the 21.2% self-rating poor a % of them would have rated average or better with the direct testing. Meaning more of the self-rated average group will be overstating their knowledge.

Is this concerning you yet? It probably should be.

While some of the report does not apply here as our superannuation and tax systems are a bit different, 17.4% do not know if they have trauma cover, 38.2% understand a terminal illness is a trigger for life cover, also about the same % here in NZ that have life cover.

What was significant is the measure between DIY and adviser based client literacy. Advised consumers had an average insurance literacy rating of 6.7 (excellent) when compared to the DIY group with an average rating of 4.5 (poor). This is good evidence that having an adviser involved, will assist you in making better insurance decisions.

Fact; if you are getting a cheaper premium online than what your adviser quoted, for the same product, the amount of cover and provider, it is for one reason only. You get less premium when you have less cover.

Less cover? However, the amount is the same. Any reduction in premium is likely to be because some significant points you wanted when you discussed it, are not included in the base online options. There are options that enhance the cover and give you better coverage. If you are trying to DIY, you are going to miss this finer understanding.

The other one is you've found another providers plan, which has fewer options/cover than the one you discussed with your adviser. If this is the case, then it is likely you are not going to have the claim experience you discussed with your adviser. The reality is you might get good advice and from that be able to make good decisions, but you are still not at a place where you can assemble the cover without assistance.

This is why you have an adviser involved. For the same reason, you do not DIY your legal and accounting advice. The difference being your insurance adviser does not charge you directly for their time, so use them!!

I'll say that again, your adviser does not bill by the hour, they get paid by the insurer. Don't be afraid to ask all of the questions you need, ask for help when it is needed and don't be embarrassed or concerned about wasting their time. You are important too!

If you feel you are not getting the attention you need, it is time to change your adviser; we'd be happy to help.

If you are looking for good advice about your insurance planning that increases your understanding and knowledge and delivers what you need, then give us a call.

I've had many two hour plus phone conversations with clients, analytical ones yes, where their need to understand things has been important to them. It is important to me too, so we do not have misunderstandings and we ensure the products in place will work as expected.

There have been more than a few who wanted to read the policy wordings too, at about 140 pages for the typical comprehensive plan, it is a lot of very technical reading. Happy to provide, but at the end of the day, it is my job to research and understand things at this level. Though if you have trouble sleeping, they are great for helping that :)

A more useful approach is a copy of the research we use to assess plans and planning, it is independent and gives a much more palatable way of reviewing products and policies. Though both wordings and research still need a level of understanding about how the insurance company applies things. It is very easy to take the wrong impression without this knowledge and think you are covered for something you are not.

For example, one policy that excludes pregnancy-related medical treatment covers pregnancy complications as a specific part of the policy. A research house rated them down for not having pregnancy complication cover.

On another provider’s policy, they cover pregnancy complications as part of their policy; it is even in the slick brochure. The downside is the clause in the policy only pays after a baby has been born and subject to not being in a public hospital during the pregnancy or birth. Hmm, a difficult thing to avoid in Auckland and many New Zealand cities as they are all public hospital facilities. Again a research house rated this policy higher because they have pregnancy complications cover.

In these two instances, the first policy is the recommended one; it is the level of cover that will pay double what the second one will, and it will pay private costs regardless of the public involvement.

As a consumer you would never pick this up, even the research houses have trouble. As an adviser, we may not know every policy wording in detail, but we have access to research and the policy wordings to directly check specific situations for requirements.

It is our job to get this right for you.

By discussing the finer points of your planning, the options you do and don't need can be explored and added/removed accordingly. Resulting in better coverage for you and potentially in a more cost effective way.

We'll help you through all of the options and structure your plan to be effective for you. Call us; we are a free service to you.