The first ever cancer-only insurance policy in NZ is now available from online provider Pinnacle Life.

What is Cancer Cover?

Cancer Cover is a form of stripped-down trauma insurance.

Whereas trauma insurance typically covers as many as 30 different ailments and is expensive, Cancer Cover focuses on the most significant of these risks, being Cancer. To put this in perspective, over 85% of trauma claims paid out by insurers relate to just three conditions – cancer, heart attack and stroke – and if you break this down further, 80% of these claims relate to cancer.

Cancer Cover is part of Pinnacle Life’s bid to win younger, price-conscious policyholders from the big insurers who dominate in trauma insurance.

Why does Cancer Cover appeal to younger consumers?

Many of the conditions covered and paid for under trauma insurance are related to ageing… such as heart attacks, heart bypass surgery, stroke, arthritis, Alzheimer’s and chronic lung disease. Whilst there is obviously some risk associated with these diseases for any consumer, more and more people in their 20’s and 30’s just don’t see the value in paying to cover these conditions. They see them as extremely low risk.

Any stats to support this?

• Cancer is the leading cause of death in NZ, accounting for 30% of all deaths.
• 1 in 6 people will be diagnosed with cancer between the age of 30 and 64.
• For females the biggest cancer killer is breast cancer. All women have a chance of developing breast cancer at some point in their lives.
• Breast cancer accounts for 17% of all female cancer deaths and around 1 in 9 women in NZ will be diagnosed with breast cancer at some stage in their lives.
• For males, lung cancer is the highest killer – accounting for 21% of male cancer deaths. However, prostate cancer represents the highest incidence of male cancer – 25% of all male cancer cases.
• In 2005 (latest NZ stats that I can find online) there were 18,610 new registrations of cancer in NZ and 7,971 deaths. This means there were almost 11,000 more people living with cancer than the previous year.

Why is cancer different to other ailments such as heart disease?

Cancer doesn’t correlate with age to the same extent that many other ailments do… even the young and the fit are susceptible. Like super-cyclist Lance Armstrong (testicular cancer in his 20’s), Wallaby rugby player Julian Huxley (brain tumour), cancer doesn’t respect how young or healthy you are.  It just happens.

And if you’re unlucky enough to be diagnosed with cancer, the financial consequences can be severe. You may need to take time off work. Or you may need to remodel your lifestyle, or you may need to find cash for to fund cancer treatment or medication.

That’s where Cancer Cover comes in… affordable cover that pays a lump sum if you’re diagnosed with Cancer.

Is Cancer Cover more affordable for younger people?

Pinnacle’s cancer policy pays up to $250,000 if you’re diagnosed with cancer. The specialised scope of the cover can save a bundle in premiums. A 40-year-old non-smoker in good shape with limited history of cancer in the family buying the cancer cover would pay only $19 a month for $100,000 of cover… compared with $37.55 that you’d typically pay for trauma cover in NZ.

You can get cancer Cover online in less than 10 minutes… and if you click here to buy, some extra cover will be thrown in free…

That’s not my opinion, mind you. I’m just telling you what the New Zealand statistics for life insurance tell us.

I’m not referring to the fact that women live longer. And I’m not getting into the debate about whether women on average earn less. I’m busy looking at statistics that say for every three NZ men that buy life insurance, only two women buy life insurance. That’s a simple fact. To back this up, a survey released by AMP in 2006 found that “one member of the household tended to be the most underinsured – the mother”, and concluded that 70% of mothers either don’t have life insurance or have inadequate cover.

Of course, this could be a statistic exclusive to New Zealand so I thought I’d check with our Reinsurer’s Hannover Life Re. And guess what… the proportion is similar in Australia – out of every 100 people buying life insurance, around 60 are men.  

Why is this so?

Do women genuinely have a lower need for life insurance? Or are there other factors?  Maybe people who buy life insurance are typically family breadwinners and maybe this statistic is skewed towards men?  Maybe it’s a spill-over from our traditional male-dominated family model, where men worked and women raised kids? Or maybe it’s because insurance brokers are more typically older males and maybe they don’t tend to target women as much? Before I get carried away speculating why women are underinsured, I’ll let you into another statistic…

In the 2006 AMP survey, only 55% of New Zealand families (hey that’s men and women) were found to have life insurance. They also found that 67% of families in New Zealand are either underinsured, or are not insured at all. So whilst women are obviously the underinsurance culprits here, men aren’t off the hook either!

Back to the statistics… this one intrigued me most of all…

Over 90% of insured people believe they have enough cover, yet only 31% have enough life insurance to support their families for five or more years. Go figure.

Before I sign off, I’ve got one more really interesting statistic to share with you. Of those who purchased an ‘online’  life insurance policy from Pinnacle Life this past year in the 20 to 29 year-old age bracket, 60% were female. Hmm, it seems times they are a-changing…    

In July 2008 Pinnacle Life launched a policy called ‘Funeral Cover’.

Whilst the product is designed essentially for people over 50 (and many insurers call it ’50 Plus Insurance’) it’s available online to anyone aged 30 to 69.

What surprised us is the proportion of people in their 30’s and 40’s that have purchased Funeral Cover - clearly the product’s hitting the mark with Generation C… so to speak!

How does it work?

The entire application process takes around 5 minutes… after which you’ll have a policy covering your funeral for $5k, $10k, $15k or $20k. And the premiums offered for these cover amounts and for this type of product are the lowest in NZ. 

Best of all, being a ‘guaranteed issue’ product, Funeral Cover is offered with no health questions asked, and the policy is emailed to you immediately online.

And not only do the premiums stay the same every year, but once you turn 85, you totally stop paying – and your cover continues free of charge until you, ahem, expire.

And the extra bonus?

Your family will say great things about you at your funeral. See these ads from YouTube…

http://www.youtube.com/watch?v=V4FHeVWjGrc

http://www.youtube.com/watch?v=Nw0s4C0g5SM

 (It’s ironic that this latter video was the last advertisement directed by a popular Malaysian movie director, Yasmin Ahmad, who died soon afterwards of a stroke aged just 51…)

Received this question from a policy holder regarding the Swine Flu pandemic and Life Insurance…

Hi Ed,

Both, my wife and I have signed a life insurance with Pinnacle some time last year to cater for each other and our little daughter.

We were wondering if your policy does have some exit condition that prevents you from paying out the agreed sum in case of a death that has been caused by a pandemic. Can you please provide some clarification on this?

Also important to note [it] might be the fact that with H1N1 looming around the corner you are likely to receive more claims on average than you expected in normal circumstances. How does this affect the insurance business in general? Is the possibility that insurances might not be able to pay out any more claims at some stage because they have been receiving too many claims for pandemic (or big natural disaster) reasons?

Strange questions I know, but you have to ask your life insurer this kind of stuff. Don’t you?

Cheers, [Name withheld]

Good question, no?

Life insurers exist to pay your claim if you die.

Pinnacle Life has no ‘exit clause’ if you succumb to H1N1 or any other type of flu for that matter.  So if you die from H1N1, you’re covered.

Life Insurers generally have their policies backed by large reinsurers who are big enough and diverse enough to withstand pandemics such as H1N1.

In this respect, Pinnacle Life is Reinsured with Hannover Life Re, one of the largest reinsurers of life insurance in the world.

Still, we hope you don’t get Swine Flu… we hear it knocks you around, although only a small percentage of people are actually knocked out.

Joint ownership is a simple reality of many small and medium size businesses.  The aim of key person insurance is to insure business continuity. Partners, shareholders and lenders to small business can secure their investments by requiring key person insurance be taken by all the shareholders. 

How it works

Consider this example;   In a two person business, Jane and Peter have an equal ownership stake. As is often the case, an agreed “buy out” option exists that can be exercised by one partner upon the death of the other. This is often an arrangement between shareholders. If Peter dies, then Jane needs to “buy out” Peters share in the business. Problem is, Jane may be in no financial position to do this. If the business were to fund Peter’s buy-out, then Jane would be left with a “loan” in place of Peter as a shareholder.  The other option for Jane is to find a new investor/partner to buy Peter’s stake. Otherwise Jane simply inherits Peter’s “family” as her new partner. In all scenarios, Janes bargaining power is limited and the continuity of the business is at risk.

However, if Jane and Peter had purchased life cover policies and made each other the benefactor, then on Peter’s death, Jane will receive a cash lump sum. This money is then used to buy out Peter’s share and can also be used to fund any loans or shareholder liabilities Peter may have been responsible for in the business.  

Key person insurance… a simple solution for potentially a big problem J

When planning a family it is wise to consider taking out a life insurance policy before falling pregnant as insurance companies are reluctant about issuing life cover for a woman who is already pregnant, due to all the possible complications that could occur.

At Pinnacle Life, we generally learn about pregnant woman applicants in the question “are you seeking medical advice”. In order to ascertain the stage of pregnancy the applicant is sent to underwriting.

Our policy is to defer cover if the application is made after the second trimester (end of week 26).  We defer until two months after child birth…

 Why you may ask?

·         High blood pressure is a common complaint of pregnancy and can lead to hypertension and even toxaemia.

·         Once in your third trimester, it is very difficult to get life insurance as pre-existing medical conditions can advance rapidly during pregnancy and conditions not already picked up will become more dominant and detectable.

·         There is the risk of post natal depression immediately after the birth

·         An added problem to trying to secure life insurance for women is that we are now seeing a new generation of higher risk pregnancies being made available by the advancements in medical technology – not always a good thing. Pregnancy is increasingly possible in older women with IVF treatment. They are also more at risk from the complications of higher blood pressure. This treatment itself carries a high risk of multiple births, again putting a strain on the woman’s health.

Take out a life insurance policy before getting pregnant wherever possible. After the event, always be upfront in declaring your medical history.

I came upon this article which is a good ‘rule of thumb’ to help you decide whether or not you need life insurance.

In summary, it’s useful to think in terms of four different personal circumstances:

1. Single, no kids: you probably have a low need for life insurance.

2. Single, with kids: generally a no brainer… you MUST have life insurance because your kids are vulnerable should you die unexpectedly.

3. Married, no kids: you may need life insurance. Various factors should be considered, such as who is the breadwinner and if there is debt (like a mortgage) that one party alone couldn’t afford.

4. Married, with kids: high need for life insurance to protect your current lifestyle and essentially to keep the roof over your heads.

Think you need life insurance? It’s easy to get covered, especially now that you can buy online, and you might be surprised by the typically low costs.

Simply put, if you don’t have anyone that’s financially dependent on you – life insurance probably isn’t for you.

Life insurance exists to provide your dependents with a financial “cushion” that will see them through in the period after your death and for some time afterwards.

To help figure out how much cover you need the Consumers’ Institute recommends that, as a minimum, life insurance should cover your debts, funeral expenses, full repayment of your mortgage and your family’s immediate living costs.

In the real world, for most of us it will come down to what we can afford to pay – when this is the case, some cover is always better than none.

Once you have your figure, buying your policy should be straight forward.

My advice is to think carefully about what you really need. Don’t be bullied into buying a product you dont need. And don’t be pushed into buying more than you need. Keep it simple and make sure you understand what you’re buying.