Taupō insurance expert Tim Flowers talks about personal risk insurance

Tim Flowers from Zero Risk specialises in the area of personal risk insurance. Photo / Rachel Canning

Interest rates rose a quarter of a per cent last month, not unexpected, but definitely adding more pressure to individuals and businesses in Taupō.

Zero Risk personal insurance broker Tim Flowers says the pandemic has led to many of his Taupō customers reviewing their life insurance, mortgage repayment insurance, income protection insurance, specific injury insurance and trauma insurance.

He says since the pandemic began, most of his business has been renewing policies for clients with existing contracts.

"Covid has given our clients the opportunity to have a really good look at their circumstances and see if their insurance meets their current needs.

"New Zealanders have a bad habit of renewing their insurance without analysing it," said Tim.

Zero Risk sends out around 100 renewal notices each month, and Tim says typically this generates two or three responses, and some months no one responds, they all just let their existing policy roll over.

He says the pandemic has motivated clients to question their personal insurance and see if it meets their current personal circumstances.

Many people get life assurance out when they are buying a house or investing in a business. Tim says they are getting it because it is a requirement from their bank, and they are often on a tight timeframe.

"They are looking at their personal risk and they're in a rush and don't get advice."

He says when people review their insurance they find nearly always find it doesn't suit their circumstances.

He gives the example of a couple where the husband was the main income earner yet all the trauma insurance was on the wife.

"When they looked at what they have got, versus what they would need, it was clear he should be the one with the trauma insurance and her less so."

He says in most relationships one person earns more than the other.

"They're paying X amount in insurance, but it just isn't divided up to best suit their needs as individuals and as a family."

Tim says life insurance is fairly well understood by his clients.

"If you've got a mortgage, then you've probably got life insurance."

He says the other types of personal insurance require a bit of thinking about.

"You need to be able to answer this question, if I die or can't work is it important to get a big payout or to have an income over the next five or 10 years?"

Renters also make up a good portion of Zero Risk clients, with Tim saying couples are typically motivated to take out personal insurance so the surviving person can buy a house and be debt-free.

Renters don't have the financial security of a homeowner, who can use equity in a home to ride out a loss of income.

"This means income protection insurance is also very important for renters."

Tim expects the rise in interest rates will lead to everyday people scrutinising their personal risk insurance.

"My advice is, pull your policy out of your bottom drawer and look at it.

"When it goes wrong, it's too late to fix it and make it do what it's meant to do."