Recently I was advised by clients that they had moved to another insurance provider. Why, I wondered?  We had reviewed the cover in the previous 12 months and confirmed that the type and levels of cover were appropriate, the premiums were competitive, and the policy wordings remained the most robust in the New Zealand market (courtesy of independent research). I rang them to get some insight into this decision.  They advised that they had refinanced their mortgage and been told that it would greatly improve their chances of the loan proceeding smoothly if they had insurances in place with the same provider.  Sadly, this is complete nonsense! Indeed, it may be prudent to have insurances with one provider and lending with another. Of greater concern was the terms offered on the new cover had a significant exclusion that did not exist on their previous policy.  Why significant – the exclusion was for the back and the client worked in construction. As such the very health issue they were likely to claim for was high so to accept this exclusion greatly reduced the effectiveness of their policy and therefore greatly increased their vulnerability! Furthermore, the new income protection policy would pay a benefit for a 5 year period whereas the current policy would have paid to age 65 if required.  Having taken on more debt to buy a rental and with their youngest starting school, this was, in my view a poor decision. There were other disadvantages to the client such as reduced levels of complementary trauma cover for their children, … Continue reading Insurance trap – remember you are in control!