AIM UPDATE - MARCH 2014

TIPS ON HEALTH INSURANCE AND FINANCIAL EDUCATION FOR YOUR KIDS

Thinking about health insurance?

                            
There’s no denying that buying health insurance can be daunting. It’s hard to know what type of insurance suits you best, what amount of cover you should get, and what’s just a big waste of money. So here are 10 things to consider when thinking about purchasing health insurance.

1.     Tell the truth: Your insurer can cancel your policies and decline your claims if they discover you've lied in your application. So if you’re a smoker, don’t pretend you’re not!

2.     Consider the big picture: While policies with limited cover are generally cheaper, and thus more attractive, think about what you’d do if you had to front up with $10,000 for knee surgery. Remember, insurance is there to cover the things you can’t.

3.     Disclose everything: When applying for health insurance, tell them everything… whether it’s a symptom, treatment, or medical condition you already have. Otherwise be prepared to fight for your claim.

4.     Type of insurer: There are two types of health insurers in New Zealand – those owned by shareholders and those owned by members. Shareholder-owned insurers have to return profits to their shareholders, so either have to be more efficient or pay out lower claims.

5.     Understand what’s covered: There are some things that won’t be covered under your policy. Make yourself familiar with these.

6.     Keep an emergency stash: Even if you’re insured, you’ll still need some emergency cash with most policies, as you can be up for 20-40 percent of the cost.

7.     Avoid blanket exclusions: Some insurers will try to pressure you to accept blanket exclusions from your policy. For example, if you have a cough while making your application, you might be encouraged to exclude any claims in the near future related to your chest. Don’t!

8.     Switch for lower premiums: Some people constantly switch between insurers in search of the cheapest deals. It may save you money, but if you have an existing condition that you weren't aware of, you could lose your cover.

9.     Constantly review: As you age, your needs change. Buying an ultra-cheap basic policy might not be too much of a risk when you’re 25. But when you’re 50, the risk rises dramatically. It’s highly recommended that you review your health insurance policies at least once every year.

10.   Don’t wait: As you procrastinate, the chances of you developing pre-existing conditions increases. And then it could be too late!

Financial tips for children

Helping your children brush their teeth in the morning and helping them with their homework is the easy part. Teaching them how to manage money is a little more difficult. These days most schools don’t offer much in terms of teaching basic money management skills, so by giving your children a few simple skills on how to save and handle money, they are likely to be more confident and better equipped to handle the temptations of a growing consumer society.

Here are a few financial tips and ideas:
Teach them from a young age. These days children are constantly being bombarded with advertising for new toys and junk food, so it’s never too early to start.

Give them an allowance. In order to learn about money, it’s important they have the opportunities to practice with real money. Even a small allowance of $1 per week teaches the value of saving.

Make them earn it. Instead of just handing your child an allowance, teach them that their money must be earned by giving them responsibilities, such as washing dishes or tidying the backyard. You could also encourage your children to earn above their allowance by babysitting for friends, walking the neighbour’s dog or even getting a job at the local supermarket.

Open a savings account in your child’s name where they can deposit the money they earn. This will teach them about interest and the value of putting money aside each month. You could even give them an incentive by matching their savings.

Help them make a budget. When they grow up and leave home they’ll need to be able to stick to a budget, so teaching them the importance of budgeting early will help them in the long run.

Help your children establish goals. Many bad spenders suffer from an “I need it now” attitude, which can be avoided by creating goals. If there is a new toy they want, help them set up a savings plan so they know exactly how much they’ll need, and how long it’ll be before they've saved enough.

Allow your children to make mistakes. If they spend all their allowance on a frivolous purchase and then come to you looking for money (and they will), don’t just hand it over. Instead, use it as an opportunity to teach them that there are financial consequences that come along with spending decisions.
By consistently reinforcing these financial tips with your children, they will develop a healthy understanding of money management – a great asset for when they grow up.