We'll be taking a look at how health insurance exclusions work and what to expect. First up, an overview of standard exclusions.
What is covered?
A good health plan will cover 100% of your major medical expenses, minus any “excess” (the part of the hospital bill that you pay). This includes things like surgery, hospital charges, etc.
What isn′t covered?
Private Health insurance is not designed to cover every possible health related cost, so before your own individual state of health is taken into consideration (at application time), the policy will already have its pre-determined set of health exclusions. Although each insurer may have their own set of additional exclusions, below are the 10 most common exclusions which appear in NZ health policy wordings;
- Psychological and mental health
- Congenital conditions
- Cosmetic procedures
- Laser eye treatment
- Elective or preventative treatment and routine screening
- Pregnancy and Infertility
- HIV and AIDS
- Conditions as a consequence of war, terrorism or invasion
- Self-inflicted injuries or attempted suicide
- Condition or illness arising from misuse of alcohol or drugs
When setting up insurance (or reviewing it), one important area to consider is the policy ownership.
In short, policy ownership gives you control of the policy and the right to deal with it, both during the life of the policy (changing contact details, cover reduction, premium payments etc) and at claim time (the funds are received by the policy owner).
There is no hard and fast rule when selecting the ownership (as the structure needs to reflect your individual circumstances), however most people choose one of two options, which we'll look at below.
As the most common triggers for getting life insurance are children and debt (ie. a mortgage) the important thing is to set up the ownership structure in a way that ensures that in the unfortunate event of your death and a claim arising, the funds of the policy end up where you want them to.
We'll look at the two most common ways to own a life insurance policy:
1/ Sole policy ownership
Sometimes the insured person will be the only owner of their policy. In this case, in the event of your death the funds are paid into your estate and distributed in accordance with the law and the stipulations of your will (if you have one in place).
2/ Joint policy ownership
In this case, both the insured person and another person (usually a partner) will own and have control of the policy. During the life of the policy any changes that are made to your policy will require signed authorisation from you both. In the event of your death, the funds bypass your estate and go directly to the remaining policy owner.
As your circumstances change (you get married, have children etc) it's important to update your policy ownership to reflect your circumstances. Changing ownership is usually very simple - and at LifeDirect, we’re here to assist you with making this change.
Can a child own a policy?
A policy owner needs to be at least 16 and most insurers don't allow you to have beneficiaries listed on the policy. So to make sure funds reach children, you're best to make sure your Will is up to date and lists where you'd like the funds to go. In some cases too, a Trust could be involved (with the trustees owning the policy). We recommend getting advice from a Lawyer to make sure your Will (or Trust) is sorted and set up how you want it.
In New Zealand, most health insurers now offer an “Overseas Treatment” benefit. We often get questions about how these work (and and we also have clients making claims for overseas treatment so see the details up close). Here’s a run-down:
First, an Overseas Treatment benefit is not travel insurance. If you find yourself with a broken leg on a Colorado ski-field, a New Zealand health insurance plan can do nothing to have you patched up or brought back to NZ (to say nothing of replacing those expensive skis).
So what is it? In short, an Overseas Treatment benefit means that if you become ill and there is a treatment not available in NZ that is available in another country, your insurer will help with the cost of the treatment (usually including assistance with air travel costs for you and a support person). This means that you can access treatment that might be too new for NZ or that we simply don’t have the expertise to do.
There are limits of course, but overall this is a great benefit. It means that even if a treatment is not yet performed in NZ, you can still consider it as an option. It’s more power in your hands – at LifeDirect we like that.
When you’re setting up a life insurance plan, part of the process is to complete an application form.
Never particularly fun, applications ask a range of questions about your health. As part of this, the application will ask for an indication of your current height/weight. Personal stuff for sure, however this is part of the overall picture that the insurer is trying to get when they are offering you cover.
Interestingly, life insurers can have very different attitudes towards a higher height/weight ratio. We will often see cases where “Insurer A” might place an increased premium on a policy, while “Insurer B” will have no increased cost. For this reason, if you’re looking at life insurance, and think that height/weight could be a consideration, we recommend dropping us a note. We will look at all of the insurers on our menu, and can very quickly let you know who is likely to be best. This can be a huge saving in cost, and also time – we’ll make sure you choose the right insurer from the get-go!
At LifeDirect we offer life insurance policies from 8 different life insurers. The polices are identical in the two most important areas – all offer full payment on death or terminal illness, and all have only one exclusion (suicide within the first 13 months of the policy starting). So you can choose any of our insurers and be assured that your policy will do exactly what you expect it to – pay your loved ones if you pass away.
However there are some differences – pretty minor, but worth thinking about. One of these is what’s called a “financial planning benefit”. The way this works is simple – if a claim is made (e.g. you pass away), the insurer will pay an additional amount (usually $1,500 - $2,000) so that your family can hire a qualified Financial Adviser to help decide how to best use the lump sum. This can be very valuable – a life insurance payment is a large amount to receive all at once and the choices of what to do with it (pay off debt? Invest in education?) can be hard to make at an already stressful time. Some quality advice can really help make sure the life insurance payment is used wisely.
For a look at which insurers offer a financial planning benefit and how much it is, check out our handy Policy Comparison
As medical treatments and procedures become more sophisticated, due to technological and medical advancements, the costs to insurers and patients increase. While an increase in costs fuels the rise in insurance premiums, it also highlights the importance of having health insurance. It is now harder than ever to self-insure - to pay for these treatments yourself.
In the 12 months to September 2012, the health insurance industry paid out $863 million in private medical claims. Compare this to just five years ago when $602 million was paid by private insurers (source: HFANZ 2012). This represents a 43% increase when compared to the 12 months ending September 2007.
Below is a table highlighting the increase in indicative costs for medical procedures from Sovereign - one of the insurers on our menu (thanks to Sovereign for providing us with this info and data):
According to recent research, the extent of Kiwi under-insurance is higher than most would have realized, and sits at a whopping 650 billion dollars!
The research, from the Financial Services Council, and carried out by Massey University researchers, compared current levels of insurance held by New Zealanders, with "ideal" levels and arrived at that eye-popping sum.
Studies like this serve as great reminders to regularly review the level of insurance you have. It doesn't take much for the cover you took out a few years ago to suddenly be too low. Throw a child or a mortgage into the mix and you can quickly be significantly under-insured relative to your "ideal" level.
Of course it has to be affordable too - our suggestion is to think about your situation and use the LifeDirect calculator to get an idea of a good level of cover - and then compare premiums across the market to see what it's going to cost. It might not be as much as you'd think.
Shortly after being named in the Deloitte Fast 50 as one of New Zealand's fastest growing companies, we were delighted that LifeDirect has also made the Deloitte Asia Pacific Technology 500, as one of the fastest growing technology companies in the Asia Pacific region. We'd like to offer a huge thanks to our dedicated team and most importantly our super-special customers!
- LifeDirect's Tim von Dadelszen accepting the award from the Hon Amy Adams, Minister for Communications and Information Technology.
The story behind the beginnings of trauma insurance is actually pretty interesting. A South African, Dr Marius Barnard, designed and promoted trauma insurance back in 1983. What's interesting is that he was also a surgeon who assisted the world's first ever heart transplant. Dr Barnard saw first hand how modern medicine and surgical procedures were savings people's lives - but killing them financially during their recovery. He believed that people needed trauma insurance not because they were going to die, but because they were going to live.
At the 40th anniversary of the first heart transplant, Dr Barnard talked about his work as a pioneering heart surgeon and how he developed trauma insurance. You can watch the video here: http://www.scottishwidows.co.uk/calculators/marius_barnard_video.html
NZ First has hit the news with a private member's bill which would provide people over 65 with a 25% rebate against the premiums they pay on their health insurance.
Roger Styles, chief executive of the Health Funds Association, says a rebate would help sustain the health system in the face of increasing costs, overstretched resources and an aging population.
At LifeDirect we think it is good to see this type of option being discussed - and we're in favour of any government initiative that helps people maintain cover. For elderly people it can be tough to afford health insurance. It is effectively a "user pays" system, so premiums can get fairly chunky as you get older. Too many elderly people are cancelling their policies because they can't afford them.