Those that have been reading my blog and social posts on a regular basis will have seen I’ve got a particular bee in my bonnet about unfunded medicines. Partly driven from my view insurance advice needs to improve but also ensuring you have access to the best treatment possible when you really need it the most.

This blog article was updated and reposted here on the 3rd of October 2016. I have left this here for comparison purposes to show the impact of Sovereign's announcement on the 30th of September.

As I wrote in this article, unfunded medicines the real risk to you, if you’re a Southern Cross policy holder you have about a 6.3% risk that if you develop cancer you’ll have to find money to pay for your cancer treatment. If you’re with another provider who doesn’t have any contribution to your unfunded treatments, you’ll have a 15% chance you’ll have to contribute to your treatment.

The reserve bank has released their latest update on the cash rate and dropped it earlier than expected. 

Some have suggested that this was expected by economists later in the year, others it's a surprise.

What does it really mean for you?

I wrote recently about a new approach Asteron was taking to income protection.

In the right client situation quite appropriate, in others it would potentially be a disaster. As the options in insurance advice expand and hybrid or niche products develop, the need to have an adviser involved is even more apparent. One that really understands the application of insurance benefits to your risks.

As an insurance adviser it is interesting watching people's behaviour. Most people are put off talking to an insurance adviser because they might sell them something. I'll talk about that 'something' later.

As an insurance adviser I look at the big picture and sit across a number of disciplines. Insurance is the ambulance at the bottom of the cliff, providing financial support in time of need and loss. Those times of need and loss can be wide ranging. From your possessions, to something happening to you or your family, to something happening to your business or your employees.

One of the things that is often said, reported in the news, and generally complained about are the increasing costs of medical insurance.

We've heard about Southern Cross policyholders up in arms because of the premium increases they have seen. To be fair, all providers' premiums increase; Southern Cross has the biggest pool of clients and the oldest pool of clients, so increases do hit hard in that particular group.

This article has been updated here, and this one has been maintained for historical reference.

Mobile phones, those funny devices that used to be the domain of yuppies and annoyed those looking for a quiet dinner out, now we can’t get by in life with out one.

The expectation is you’re now available 24/7 and your smart phone will substitute all manner of thinking requirements.

We’ve heard plenty about mobile phones and driving, yet people still hold their phone while driving. No, holding it in your hand on speaker phone is not hands free ;) ahh, it’s still in your hand!

Though, they are causing all manner of distractions, and my couple of weeks driving an electric vehicle highlighted this, as I nearly mowed down at least 6 or 7 ambling pedestrians.

In our opinion in all situations Agreed Value is. Yes, there are some clever tricks you can play with tax and claims on indemnity or loss of earnings, but the vast majority of claims just don't work out like that at claim time.

In my experience when it comes to Income Protection claims, indemnity claims cause the most headaches. In my time as a manager looking after advisers and as an adviser myself, the only problematic claims I have had were indemnity claims. Agreed Value never had the drama and hassle.

A really good question. Let's tackle over insurance first

With over insurance, in its simplest form, if the risk is not realised, you've paid more for the transfer of risk than you had too. What I'm meaning is if you don't die, don't have a trauma, don't have a loss of income or property, then the risk being covered hasn't been realised.

For example, if you have a $500,000 mortgage and have a $1,000,000 life policy and you make it to retirement having paid off the mortgage. Then you have likely paid double what you needed to, to transfer the risk. Assuming your need was limited to just the mortgage over that time.

There's an undercurrent philosophical debate going on just behind the screen. At present, you're unaware of it, unless you're already in the health system as a patient or a doctor. This undercurrent defines what treatment is available to you and how much the government is prepared to spend their budget on you.

It might sound crass to put a number on the value of a life, unfortunately, in the world we live in, money talks, you know the rest.

Also, for leukaemia too, if the commentary in the media is to be believed. This new medicine on the market, approved for use in New Zealand, is currently not funded. The indications from the commentary, this medicine is one of the only options for melanoma patients to be successfully treated. 

I am not clear on the survival rates, but the results to date appear to be miraculous when standard chemotherapy has been less than useful in treating melanoma to date according to the many articles on the subject. The problem is the cost, somewhere in the region of $300,000 over two years to access this new treatment.

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.

The New Zealand Herald kicked off their five-part series on cancer today. Martin Johnson investigates the controversies in cancer testing and treatment and the moving stories of people diagnosed with cancer.

I've mentioned many times, here in my blog and many times to clients and frankly anyone who will listen, that our public health system, while good in many areas, often falls short in many others.

Managing medical expenses is a large area of risk management. It is also an area where people often don't spend a lot of time. Public health is an area where the government spends the most ($15 billion for 2015), which should be an indicator that you need to consider your options here as well. 

Medical Insurance Treatment Myths and Realities

My share of my blog post on Movember got a really good reply with some well thought out points that I come across with clients every day. Some are well founded and understood, others things have changed as has the approach. I felt it was worth a blog post by itself.

Susan’s original post:

Good on you Jon-Paul, admirable cause, but it is my view that Health insurance company don't do Health prevention, you have to pay for this type of health service even if you have a mastectomy your health insurance won't pay for a re-build for want a better word, apparently its plastic surgery and its not covered to have you looking normal after going through harrowing surgery and treatment...

This is what we achieved for one of our clients without getting creative on cover levels and types of cover, the creative bit is likely to be another $2-3000 per annum ongoing.

So what have we achieved?

We've managed to achieve a $2,500 per year average saving on what they were previously doing and this applies to what they do going forward. Add to this an additional $2000 per annum after restructuring how they're covered, giving an expected savings of $4,500 per annum ongoing.

Significant in most people's book, so how did we achieve this?

When the subject of medical insurance or cancer treatment comes up, the discussion on non-Pharmac medicines usually follows.

What are non-Pharmac medicines?

Non-Pharmac medicines are where the government does not fund the drug or treatment being prescribed or recommended for a treatment and you will have to find the money to pay for it.

It does not matter what the stats are, if you are someone who needs a treatment and the government does not fund it, you want to be able to access it. Which is why, dollar for dollar you take the medical policy with coverage over the one that does not, even if it is a bit more expensive you probably still should.