My wife and I are 68 and 66 respectively, happily retired and financially secure. We are both in good health, though both have had hip replacements in recent years.

We are still careful with our money, and I am currently reviewing our insurance requirements. I am concerned at the cost of health insurance, and looking at ways to minimise this cost while maintaining "adequate" insurance cover. I don't recall seeing an insurance-related question in your column, but it is worthy of a general discussion on the reasons for having insurance, and the options for managing the cost.

In my view, it is easy to over-insure against the worst possible calamity or series of calamities, whereas an individual is likely to only experience one or two in their lifetime. In New Zealand, a major emergency like a heart attack will be looked after in the public system, and insurance is needed mainly for joint replacements and the like, where being on the public list can mean a very long wait.

Our health insurance has options for large excesses, up to $6000 a year, and this drops the premiums significantly while maintaining cover for major surgery, hospitalisation and ongoing treatment. We are in a position to carry such an excess, paying medical expenses out of our investment income and using capital if necessary.

I am a great believer in insurance for major risks (for example, the house burning down or a major hospitalisation), but minor stuff (like a broken window or a visit to the doctor) being paid out of income.

One option I am considering is self-insurance, putting money into a "health emergency fund" each month and using it as required. Saving our present health insurance premiums would fund a hip replacement every two to three years!

I would appreciate your thoughts on the best strategy for insurance, particularly health insurance. It would make a change from KiwiSaver.

Now, now! As I pointed out recently, these days this column probably covers KiwiSaver too infrequently, given the percentage of the population affected. Still, I admit that insurance is probably also covered too little - partly because I receive few questions about it, but also because the very word tends to make people yawn.

So the challenge is: how to make insurance sexy. The best I can come up with is to look at ways you can save lots of money on insurance - money you could then spend on romantic nights out.

Broadly, I agree with your approach. It's common to over-insure. As a wise person once said, "If you've never missed a plane, you've wasted too much time at airports."

For many people, it's a great idea to have large excesses on all insurance - car, house, contents and so on. If you have loss of income insurance or similar, you can set it up so the payments kick in only after you have been off work for a few months, and the premiums will be much lower.