Apart from life cover there are a number of other risks that can be insured against. Statistics again show the necessity for this protection. Of the 415,000 males and 433,000 females in New Zealand currently aged between 30 and 45:
- 50,000 (12%) males and 80,000 (18%) females will experience at least one period of disablement lasting six months or longer
- 33,000 (8%) males and 54,000 (12%) females will experience at least one period of disablement lasting 12 months or longer
- 42,000 (10%) males and 55,000 (13%) females will be diagnosed as having cancer
- 39,000 (9%) males and 13,000 (3%) females will be admitted to hospital following a heart attack
- 27,000 (7%) males and 8,000 (2%) females will undergo open heart surgery
- 11,000 (3%) males and 5,000 (1%) females will suffer a stroke
While statistically life expectancy rates are improving, due to improvements in health and medical treatments, more are living longer with disablement, which reduce income earning prospects and savings.
Source: New Zealand Life Tables 90-92, Public Hospital and Selected Morbidity Data 1994, Selected Morbidity and Hospital Data - Volume II - 1993, Selected Morbidity Data for Publicly Funded Hospitals 1995/96, Cancer: New Registrations and Deaths - 1992.
A. In a case of premature death of a family's main or supplementary "bread winner" the first major problem faced by a family would be the repayment of all outstanding debt (mortgages, personal loans, taxes and funeral expenses). Repayment of such debt can be easily achieved by adequate life insurance cover.
Provision can also be made to establish an emergency fund or cash reserve to help a family through at least the 6 months immediately following the death of the breadwinner. Planned future capital costs i.e. children's educational needs, should also be incorporated into any calculation.
A. A second but perhaps more pressing need for the family would be to consider replacing the actual current and ongoing income lost through the death of the bread winner. This is a much more comprehensive calculation because it must consider all possible expenses so as to allow for a capital sum, which invested today, will provide the desired income over the years to come. Consideration needs to be given to:
If you have any other questions, or would like some help with risk analysis, please contact us