This question gets asked from time to time, and the simple answer is to help people. Which often gets a 'say what' sort of look, then 'but you sell insurance?' Yup, that's what I do.

Those in the industry understand my answer intimately, those outside often don't understand it so much.

I'll try and explain.

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.

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.

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?

By posting this, I’m going to raise a contentious topic. One that clients often do not understand, advisers generally avoid discussing, providers publicly discourage but operationally encourage and the Financial Markets Authority (FMA) is starting to have a closer look at.

I have stated the previous parties in a very specific order, from most impacted to the one with the stick they can use, and the players in between.

Another reminder in the business section on stuff today, if you are renting you are responsible for any damage. and it can be substantial if it all goes wrong.

If you're renting you need to have some level of contents cover. Ideally enough to cover the replacement of your possessions but more importantly cover for damage you may be liable for.

It oft be said, ’All my insurance adviser does is turn up and sell me more insurance’. While this may be true, I hope it's for the right reasons, you have more risk. This is the point, your risks change.

What is surprising is how people set and forget their insurance, be it life or property insurance. A great example is a past colleague who had not reviewed his contents cover since university, $40,000 then might have been a great deal, now a successful business owner with teenage kids it barely covers what's in his lounge.

Most things in life tend to be a reaction after an event and what happens after is the 'cure'. It would be better if the event did not happen at all?

One theory is the food industry makes us sick so the drug industry can sell us a cure. It has been suggested but the evidence to support this is a challenge and in a complex world, it would be hard to prove.

Conspiracy theories aside, there are things we can do to improve our own lot. Eat fresh foods, reduce processed foods and exercise, are a few.

Policy anniversary letters, why does the premium always go up?

This is a common comment I hear from clients, that and 'It's got too expensive can you do some thing about it?' If you are a Willowgrove client you are likely to be getting your first or possibly your second anniversary letter from the insurance company, so this is relatively new for you, if you did not have insurance cover before we met.

The simple answer to the title is; you are a year older and age is part of how the insurance company assess risk. Bluntly put, being a year older the chance of you claiming has increased.

What is not always understood with the annual policy renewal is your cover level has probably increased too. In recent times the level of cover increases have been up as high 5% inflation, though the last couple of years have been a bit lower.

Have you got it insured correctly? Martin Hawes article here, raises a particually direct point about your house insurance if it is in a family trust.

As Martin outlines in his article, 'underinsurance also ought to be a worry for trustees of family trusts and other trusts.

Trustees are obligated to look after (and properly insure) the assets of a trust, and if they do not, the beneficiaries can demand that trustees make good any losses. This means that if we had simply accepted the default amount from the insurance company ($693,000) and the house burnt down and cost $1.1 million to rebuild, the trustees could be liable for over $400,000. This should have trustees thinking hard.

I cover a lot of ground in this post, though a bit of a lengthy technical one. Maybe that's part of the reason protecting incomes is not high on the completed tasks list, as policy details can get quite complicated.

I have mentioned before that income protection in New Zealand is not something that is well covered, much like the rest of the world. With about 80% of the population without financial support in a non-accident disability situation. This comes with potentially limited support with ACC. There is a lot of exposure not only for you personally, but also for your family members, co-workers, suppliers and clients.

What is the real risk?

Roy Morgan Research has published updated information on insurance coverage in New Zealand and it is not a particularly pretty picture.

What does it really look like out there in New Zealand?

Almost 1 in 7 Kiwi’s do not have any insurance cover at all. I don’t know about you, but 1 in 7 people I know are not financially independent enough not to need insurance cover at some level. This suggests Kiwi’s are taking the risk that ‘she’ll be right’. This may be knowingly but most likely unknowingly.

Insurance is one of those things people do not like paying for and often bundle it in with power, interest, rates, tax and bank fees. Something to address when we really have to until then, we will ignore it and just pay the bill.

Insurance is about covering a loss, well a potential loss. Because you need to take insurance before you have the loss in order for it to work. People comment ‘but it should cover X, because I know about X and that is what I want cover for’. If you know about X then the insurance company is unlikely to bet on X because it is likely to be a sure loss for them.

In general terms yes. There is a but in there though, and it is a big one.

When you applied for your policy, did you; tell the truth, the whole truth and nothing but the truth? If you did, you are probably ok and have nothing to worry about, if you are unsure read on.

In English law, and carried through to New Zealand law, is the basic principal of good faith and truth when talking about contracts.