Insightful question received from a reader…

Q

I would love to buy life insurance but I have one concern. If insurers cover you until you are 100 years old, there’s a 100% chance the insurance company will have to pay you the amount you are covered for.

I have put together a spreadsheet with a $30/month payment and interest at 8% pa. I could not save even $250,000 in 50 years, whereas if I die, the insurance company would have to pay out $420,000 – the amount I covered myself for.

What am I missing here?  How come the insurance companies don’t go broke?

Thanks, Roxanne.

A

Thanks for this Roxanne.

There are a few things that you haven’t factored into your spreadsheet.

Firstly, a life insurance policy that covers you until you are 100 years old would have a monthly premium that increases each year.  This annual price increase takes into account the fact that your risk of dying increases each year, as you age. In the first year you may be paying $30/month but after say 20 years you would be paying something like $200/month. So you’ll need to factor this annual increase into your spreadsheet numbers.

Secondly, a large proportion of people taking out life insurance cancel their policy long before they die.  Life insurance is like car insurance in some ways… you only need car insurance while you have a car. Once you sell your car, you can stop paying the insurance and cancel your policy.

Most people don’t continue with their policy past age 75. Besides the fact that it gets very expensive, the purpose of life insurance is to financially protect those people that are dependent on you. By the time you are 60 or 70, most people don’t have financial dependants – their children generally have their own income. So they no longer need the insurance and they stop paying.

That’s insurance for you… collecting premiums from the many, only to end up paying the few.

Great business:-)

Movember is an annual, month-long celebration of the moustache, highlighting men’s health issues, specifically prostate cancer and depression in men.

Who can we blame for this initiative?

Look no further than the Movember Foundation – a global not-for-profit, charitable organisation which runs this Movember celebration of men’s health.

For the record, the idea for Movember came about in 2003 when a few mates having a beer in a Melbourne pub recognised that men were lacking a way to adequately promote men’s health and came up with the idea to bring the moustache back for one month, and in doing so, have some fun, raise money and hopefully encourage men to talk about their health.

So why are we talking about Movember on a life insurance blog???

Because we in the life insurance business are impacted by the very health issues highlighted by this initiative – particularly prostate cancer.

Did you know?…

• Prostate cancer is the most common cause of cancer-related death in men (3.8%) behind lung cancer (6.1%) and bowel cancer (4%)
• In NZ, around 2000 to 3000 men are diagnosed with prostate cancer each year.
• There are generally no early warning symptoms for prostate cancer
• All men over the age of 50 are at risk of prostate cancer and should be tested annually
• If you have a history of prostate cancer in your family you should have tests from age 40
• Prostate cancer is curable if detected and treated early
• Men are not bullet proof. (Yep, it’s true… men get cancer too)
• You can get a Cancer Cover policy online that pays you a lump sum up to $250,000 if you’re diagnosed with cancer.

October is Breast Cancer Action Month and 8 October is Pink Ribbon Day. This is all about making people aware that breast cancer is the #1 woman-killer in New Zealand and that women should undergo regular screening.

Some facts:

• All women have a chance of developing breast cancer in their lifetimes.
• Around 2,400 women are diagnosed with breast cancer each year
• As women grow older, the risk of being diagnosed with breast cancer increases…

• The rate of breast cancer diagnosis is increasing in NZ… an 18% increase in the ten-year period 1995 and 2004…
• However, the death rate from breast cancer is falling slightly… due (in part) to the efforts of making women more aware of the need for regular screening… which is exactly why we’re talking about it on our blog!
• Still, more than 600 women are likely to die this year from breast cancer… that’s 12 women per week! So no reason to be complacent.

In NZ many women tend not to have regular screening mammograms…. this means if there is breast cancer, it’s often well established by the time their doctor examines them and these women are more at risk of dying from breast cancer… obviously.

Finally, Pinnacle Life recently launched an insurance product called Cancer Cover.

The product pays out a lump sum up to $250,000 if you’re diagnosed with cancer… cash you can use to supplement your income, pay medical bills or simply take some time out.

For each Cancer Cover policy purchased online, Pinnacle Life will make a donation to The New Zealand Breast Cancer Foundation (NZBCF).

To get a quote for Cancer Cover, click here…

Every year around 600 men in New Zealand die of Prostate Cancer.

BTW, that’s more than the total number of people killed in New Zealand road and workplace accidents combined!!

Why so many?

Because men don’t realise how dangerous the disease is, they don’t talk to their doctor about it and basically… they simply don’t do anything about it, period.

That’s why Blue September was invented.

Blue September promotes an awareness of the danger of prostate cancer and highlights that early diagnosis and intervention increases your chances of beating it.

Did you know that the death rate from Prostate Cancer in New Zealand could be halved by men having regular health and prostate checks from age 40 onwards?  So just by raising awareness and increasing early detection and treatment, 300 men’s lives could be saved every year in NZ.

That’s why Pinnacle Life is committed to raising people’s awareness of prostate cancer and why we’re a proud sponsor of the Prostate Cancer Foundation of NZ.

When you buy a Cancer Cover policy online from Pinnacle Life, Pinnacle donates 25% of your annual premium for the first year to the Prostate Cancer Foundation.

So, take a close look at Pinnacle Life’s Cancer Cover.  If you’re diagnosed with cancer, the policy pays you a cash lump sum up to $250,000 to help you make ends meet.

September is Cervical Screening Awareness Month – the aim of which is to raise awareness about the benefits of cervical screening.

Why is cervical screening important to the world of life insurance? Because any positive action that individuals can take that contributes to detecting cancer at an early stage will ultimately result in less people dying from cancer.

Consider how cervical screening changes the odds…

So, with regular screening, women are 6 times less likely to either develop or die from cervical cancer.

Conclusions

• Get screened… sounds like a no-brainer!
• Take a look at cancer insurance… what have you got to lose???

(For more info see NZ National Screening Website http://www.nsu.govt.nz)

Today is Daffodil Day.

Daffodil Day is about raising the public’s awareness of Cancer and donating to the Cancer Society.

For us life insurance guys, cancer is always top of mind, because cancer is such a significant disease and one that many people insure for.

Insurance won’t stop you getting cancer, unfortunately. But it can help to make your life easier or the lives of your family and dependants. People take out life insurance so that if they die from cancer, their family can survive financially. Some people also take out Cancer Cover which pays them a cash lump sum, tax free, in the event that they are diagnosed with cancer and survive. The money can be extremely helpful in allowing sufferers to restructure their lives, pay medical bills, pay off the mortgage or help make up lost income.

See Cancer Cover online.

Cancer statistics in New Zealand are pretty scary

·1 in 6 people will be diagnosed with cancer between the ages of 30 and 64.

·Cancer is the leading cause of death in New Zealand, accounting for almost 30 percent of deaths, slightly more than non-congenital heart diseases.

·For females, the biggest cancer killer is breast cancer (17% of all female cancer deaths)

·For males, the biggest cancer killer is lung cancer (21% of male cancer deaths) however the highest ‘incidence’ of cancer is prostate cancer (25% of cancer cases diagnosed).

Click here to go to the Cancer Society website.

A letter received by Pinnacle Life from Lynn…

Dear Sir

This letter is to advise you of the great service we received by your staff when it was decided after hearing you on 1ZB to enquire about transferring our Insurance to save 20% on our premiums.

Initially by calling your 0800 number I had the pleasure of talking to Anna, she was excellent in giving me all the information and promised to post the necessary paperwork so we could set this up. The next day the information was received, just shows the dedication in service she had shown. Details were returned and once again Anna telephoned to say it had been received and she would pass it onto your underwriters.

The underwriters did take some time to process and I was concerned that we might not make the deadline to get the first years cover for 25% less. Then came Bill Kim with amazing service advising he was processing the policy. This was only a few days before the deadline. When asked if the policy was accepted by us would be still be in time. He offered to fax the relevant papers through and advised if these were faxed back to be received by the 29th June he would be able to offer the above.
He kept me informed by telephone where we up too. I had earlier asked what time he finished work and he advised 5pm, it was 5:15pm when he phoned me on the 28th to make sure I had received the faxed documents. This was the best service I have had in many years, I have telephoned them both (Bill and Anna) to thank them very much for the wonderful service but I wanted you to know what great staff you have and would very much appreciate if you could congratulate them both on giving your clients a wonderful experience and both are a credit to you and your company.

Yours faithfully
Lynn Waters, Pakuranga
1st July 2011

Four years on…its Happy Launchday!  When we launched this blog on 30 April 2007, we said;

“The Life Insurance Blog has been created to demystify life insurance for consumers by providing insight and advice as well as generating debate and conversation about all things to do with life insurance.”

“Whilst life insurance is a serious business and something we all need at some point in our lives, it is essentially a simple commodity.” (…honestly, your family receives a big cash payment when you die… how simple is that?)

We also said;

This blog isn’t going to be your top entertainment site on the web, BUT if you’re thinking of buying life insurance there are some things you’ll want to know.”

“When it comes to life insurance, Pinnacle Life is for the consumer. We’re not here to sell you a product or extras that you may not need. We’re about cutting through the insurance mumbo jumbo, getting the price down and cutting out any middlemen that don’t add value.”

Well, four years down the line and we haven’t changed our pitch. This still pretty much sums up Pinnacle Life’s approach to the business of life insurance.

We want to thank the regular readers of our blog and also the many people that have gone on to buy life insurance from Pinnacle Life through the Pinnacle Life website. You’re why we do it.

The Pinnacle Life website has been awarded ‘Official Honouree’ status at this year’s US-based Webby Awards.

Pinnacle Life sells life insurance direct to consumers online via an easy-to-use website designed and implemented by Intelligent Life Limited. The Pinnacle Life website has already won six major international awards for design, innovation and use of plain English. This latest award rounds out a period of four years since its initial launch in April 2007.

The Webby Awards are regarded by many as the ‘Oscar’s of the internet industry.

According to The Webby Awards website, there were almost 10,000 entry nominations this year received world-wide from over 60 countries.

The ‘Official Honoree’ distinction is awarded only to those websites exhibiting “remarkable achievement”, amounting to less than 10% of all websites nominated.

These are dark days for New Zealanders, especially if you live in Christchurch. To those of you that’ve lost loved ones, or who are anxiously awaiting news of people that are missing, we can’t really know your pain, but we can provide our support.

At Pinnacle Life, we understand it’s a difficult time if you live in Christchurch. We have many policy holders in this area and wish to help in our own way to make your lives less stressful than it already is.

So, if you’re a Pinnacle Life policy holder from Christchurch and you’re going to have trouble making your insurance payments, we’re here to let you know we can be a bit flexible with your payments right now.

Give us a call Toll-Free on 0800-22-22-23.  We’ll do what we can to help you. And even if you don’t (or can’t) call us, we’ll connect the dots and do what we can to help you anyway.