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.

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.

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.

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.

Ok, I have raved about this in other blog posts. I have had an idea, a general concept, that access to medicine was becoming a problem—a real problem—with one of the four pillars of New Zealand society: Health, Education, Justice, and Social Support.

Now with this latest report, there is a clear indication we’re well behind with Health funding. Education, Justice and Social support all have their challenges, I am sure, but Health is an area I spend a lot of my time working with on behalf of my clients.

If you are a regular reader of my blog you will have come to realise that there more to life insurance than just having a policy, dying and getting some money.

I have touched on this subject in other posts; this is another post that explores this much more deeply. Level premiums are a somewhat lesser used but potentially considerable part of your insurance planning.

I’ve got insurance this under insurance thing doesn’t apply to me? It probably does apply to you

What I’m referring to by underinsurance are the various studies around the world, that are pretty consistent with saying about 70% of the population are under insured when it comes to life insurance.

Why do I say it probably does apply to you?

This is where as an adviser, I’ve sat down across the table and the eye’s have rolled, saying here we go again.

You know what, it probably is a good idea, she has been thinking what if?

Especially 'what if you're not here?'

Breast cancer, or for that matter any form of cancer, with women gets a reaction in the media. Breast cancer has certainly been the one that has had the majority of attention over the years.

In 2003, there were large headlines about access to Herceptin and its costs, especially as the Aussies had access to it from an early stage.

• Here in NZ, the budget at the time just didn't have the capacity to handle the cost.
• On the insurance side, there were only two medical insurers at the time able to offer cover, one that stopped not long after Herceptin hit the market, leaving 1 insurer providing non-Pharmac cover for new policies for nearly 10 years.

Now that we've got over most of the funding discussion on herceptin, it's partially funded rather than fully funded; other areas around cancer treatment are getting attention.

You have a mortgage which is why you're probably asking this question, so the logical leap is you have a mortgage because you either don't have the financial resources not to or you wish to leverage your capital for the maximum return. Either way you have taken on a financial risk by having a mortgage.

If things go to plan and nothing happens to you or your property then the risk has not been realised, the question then becomes what if the risk is realised?

Mortgage Protection Insurance is how you go about mitigating this particular financial risk.

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.

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.