Sorted has a blog and on it Tom Hartmann has written a thoughtful post about the cost of rate-for-age cover. The powerful image of a steep set of stairs brings it home (he lives in Wellington, so it is an easy image to identify with). I'm a bit biased about the article because it quotes me, but more importantly, it does nail the issue of rising costs.
Let me illustrate: Use a fairly ordinary package of benefits to construct the 'ideal': repay debt, life cover of 5x income, plus IP at 75% of income, to 65 on a four week wait. I've only allowed a typical, but very low, $50,000 of Trauma and TPD. I did not select the best options in IP. I left out health insurance completely.
At age 35 the package costs just under 4% of income
At age 40 it will have risen to over 5% of income
At age 55 it will be over 15% of income
At age 60 it will cost about 24% of income
Those scenarios allowed for increasing income and reducing debt levels. Combine that with the 'ideal' package of home, contents, and car, and 'ideal' health insurance, plus, of course, the 'ideal' contribution to KiwiSaver... I don't know if there would be much income left. It is easy to see why people aged 50+ are shopping their cover around and cancelling chunks of it. That's because there is nothing 'ideal' about spending a quarter of your income on insurance.
Tom Hartmann from the Commission for Financial Capability has written this article for the NZ Herald. A focus group of IFA members put together by the FMA discussed the things they do for their clients to ensure they are going to get a good result, including instilling confidence, pushing them out of comfort zones, spreading risk, and more.
I liked our Commission for Financial Capability, and I like Sorted. These practical things are better than their much-better funded but far more controversial equivalents in the UK, for example. However the results of a survey of Sorted users wasn't as useful as some media suggested. Mainly because it was only sorted users, and because the survey, because of its design, could not be considered a guide to New Zealand as a whole. Link.