Outrigger Financial guide
Insurance explained
What each type actually does, and which ones matter most for your whānau.
The whole idea, in one sentence
You pay a small cost you can plan for, so you never carry a large cost you cannot.
That is it. The skill is knowing which risks are worth handing over, and which ones your family could absorb on its own.
Start at the top of the list
Nobody needs everything. Most whānau work down this list until the budget runs out, and that is a perfectly sensible way to do it.
What each one actually covers
| Type | Pays out when | Does not cover |
|---|---|---|
| Life | You die, or a doctor diagnoses you with a terminal illness and gives you 12 months to live. A tax free lump sum to your family. | Illness or injury you survive and recover from. |
| Income protection | Illness or injury stops you working. Usually 75 to 85% of your income, monthly. | Redundancy. |
| Trauma | You are diagnosed with a listed serious condition, such as cancer or a heart attack. Lump sum. | Conditions not on the policy list. |
| TPD | You are permanently unable to work again. Lump sum. | Temporary inability, that is income protection. |
| Health | Specialists, scans and surgery in the private system. | Accidents, mostly ACC. Usually pre-existing conditions at first. |
| Business | Your business is interrupted or held liable. | Your personal income, that is income protection. |
How much life cover do you need?
A rough starting point you can do on the back of an envelope:
What is left on the mortgage
plus about ten years of your income
plus what it will cost to get the kids through school
That total is a sensible minimum. An adviser will sharpen it, but if you are miles under that number, you already know something useful.
Three things that could impact the price
The wait period
On income protection, this is how long you wait before payments start. If you have three to six months of expenses saved, choosing a longer wait period drops the premium noticeably.
The excess
On health cover, a higher excess means a lower premium. You cover the small stuff yourself. The real value of health insurance is the big unexpected procedure, not the $300 one.
Any pre-existing medical condition
A condition you already have can mean a loading, which is the insurer charging a higher premium for the extra risk. It is not a refusal and it is not personal, it is how the pricing works.
This is also why cover is usually cheaper the earlier you take it out. As we get older we become more susceptible to being diagnosed with something, and the premium reflects that.
Three questions worth asking about a policy you already hold
- Does my income protection pay if I cannot do my job, or only if I cannot do any job? The first is much more valuable.
- Has my cover kept up with my mortgage, or was it set when I borrowed far less?
- Am I paying for something I would never claim on?
Not sure what you already have?
Bring your existing policies. We will read them, tell you plainly what they do and do not cover, and say so if you are already well set up.
This guide is general information, not personalised financial advice. Cover, wording and exclusions differ between insurers. Outrigger Financial Service Limited, FSP1009635.