Insurance and shades of grey, no not 50 shades but certainly something most people don't like to hear when it comes to insurance. Most people want to hear black and white. My experience is every claim has shades of grey and they are rarely cut and dried. There is always something that pops up; most are foreseeable, some not so much.

Where I am going with this is the differing effects different policy wordings have at claim time.

For example there are a few insurance company trauma policies where a good angina attack could almost qualify for a trauma claim and then there are others where you have to be half dead and not working, probably not working in a manual job ever again, before you could claim.

No, I am not talking about the severe trauma products we have started to see recently, but the existing trauma policies in the market. I will come to the severe trauma policies later.

When it comes to risk management, not only having the right sort of cover, (life, trauma, income, medical etc), in place is important, but having the right flavour is too. If you need your trauma to pay at the earliest stage of your condition, you do not buy one that will only cover you when you will never work again. Likewise, there is no point paying for cover under an early stage trauma for your mortgage when you want this paid when you get to the stage you cannot work anymore.

The point I am making is when it comes to insurance policies, not all policies under the same category work the same way.

There are a number of insurance providers out there that trade on their past glory as innovators but have stopped innovating. There are others who trade on their reputation that they pay claims; great that they do, but their policies have not been updated since Adam was a small boy. Often this results in policyholders receiving claims much later in their medical journey than they anticipated. It is not that these insurers do not pay claims, because they do.

It is about when they pay their claims, for you as the policyholder this is important.

Is the income claim paid at the end of the waiting period in advance or is it paid in arrears? This can be significant and add an additional month to the wait for funds, which may result in additional financial pressure.

I fully understand the need for insurers to balance the books on cover vs premium charged, but having a good range of products priced accordingly is an important part of meeting your needs as a policy holder too. It then falls to the insurance adviser involved to structure the cover in a suitable way to balance the needs against the product solution.

Things like insuring the mortgage for a trauma event that could be considered more minor on the scale. You have a cardiac event and have some time off work, but on the whole you're going to be ok and get back to work fairly quickly. Do you really need to have the whole mortgage paid off? To might be desirable, like a lotto win, but not realistic to insure.

Would it be better to make sure you have some funding to give you some choices about your recovery? You could work but you want to take a month or two out to ensure you get your health right? You want to take that family holiday you have always talked about but haven't quite got around to doing? This approach than with the more expensive cover is more affordable long term, and more likely to be there when you need to claim.

This is where the recent severe or progressive trauma products come into play. Enabling you to have building blocks for your coverage. So on the minor scale you get enough to get some things done, but if you have a really major event you can tick off the larger items, like the mortgage with the severe product paying as well.

How many shades?

To run though the options on one insurance providers personal insurance range, which to be fair implementing all of it comes with some cost, will give you a bit of an idea.

• If you end up in the public hospital system one policy could provide some financial support towards some of the additional costs or loss of income you might face.
• If you then went through private hospital surgery another policy would cover the costs of the surgery and associated specialist and testing.
• If that medical event impacted your ability to work, an income protection policy could replace a portion of your income.
• This can be broken down into you mortgage payment, fixed household expense and income protection, all doing a similar job for your medical disability and it ACC is involved, it doesn't affect your benefits quite so much.
• With the same medical event you may need additional financial support, so X number of months of an additional benefit could be paid with yet another policy. Certain criteria apply to this one.
• With the trauma policy additional funds for that family trip could be accessed if the condition was significant enough.
• And with the severe trauma cover, if it's bad enough, paying your mortgage off.
• If you find yourself never able to work again then funds to assist paying for your care could be accessed, this may include your partner stopping work to care for you too.
• And then there's the terminal illness situation where we can advance your life cover to you or if you died this is when this would be paid in full.
• Then off into the future after you died, we can provide an ongoing income to your surviving family members through the use of a life policy that pays out monthly, meaning there's never a large lump sum at risk of being squandered.

That's quite a range of options and there's more than 50 shades of grey in there. Actually there's more than 25,000 different shades across the New Zealand life insurance market, according to a 2012 investigation by one research house. Since then we have had a number of new products and refinements of existing products, complicating the landscape even more.

This insurer for the above list has introduced three distinct products since then.

As your adviser my job is to sift through all of these options and apply them to your situation, some of them are straight forward, some of them are more complicated. Some decisions will eliminate thousands of options quite quickly, others will have multiple solutions which need refining carefully. This is what I do with every client, this is what I would do for you.

Sometimes application of product isn't the key issue, it's getting coverage for your existing medical, occupation or financial situation. Sometimes these things eliminate providers in their own right, as insurers do pick and choose the types of risks they will and won't cover.

For example one provider will only offer life cover for a client, another will offer all benefits in their product range. But yet another client will get the full range of benefits from the first provider but no cover at all from the second one. This is the insurance market at work.

For many people looking at what we do sometimes it looks like smoke and mirrors, with a good adviser it is not. They are doing their job to ensure the cover you have and hold, works.

Want to look at your options to cover you how you want with confidence it will work for you, give us a call.