Sleep quality tends to decline with age. Modern lifestyles are often blamed for poor sleep - but there is definitely some controversy over those ideas. But over recent decades prescriptions for sleeping pills have been rising. One insurance adviser in Auckland says that at least a third of women must declare either anti-depressants or sleeping pills on their application forms. Something is going on, and there are risks: 

'Over the longer term, depression and dementia are significant risks, as are worsening anxiety and falls. Dependence brings the problems associated with withdrawal. Associations have also been reported with cancer, pneumonia and other infections.' says Dr Chris Ball in this article.

'For years, the medical community suspected that benzodiazepines and Z drugs were associated with premature mortality. A large UK study confirmed mortality is significantly increased. In 2014, deaths involving benzodiazepines were up 8% from the prior year and totalled 372. This is the highest level since data was collected.'

Clients are sometimes suspicious of all the different types of insurance they are offered. They can find it hard to believe that they really need income protection, or trauma insurance. A great way to help them with that decision is to show them some stats from a trusted third-party.

We got a local actuarial firm to provide us with some tables of risks that we could build into Quotemonster to make it really easy for you to include these in your insurance reports.

As with the pricing and research on Quotemonster we personalise these statistics to the age and gender of the person or people that you have entered into the quote. This makes the information so much more powerful: it isn’t just any number; it is a number relevant to them based on New Zealand experience.

To add a client risks report you need to prepare a quote just like usual – remember this is so we can choose the statistics relevant to them. When you get to the report stage you need to put a tick in the client risks report. Then hit the view report button, and you’re done.

Scroll through the report. Near the end of the document (depending on how many other items you added to the report) you will find this page. Note that there are risks given for each of the main risks you can quote on: death, becoming totally and permanently disabled, suffering a critical illness, and becoming temporarily disabled. We don’t have medical insurance on the list as nearly everyone that lives could claim on it at some point in their working lives.

Now look at the columns. There are risks shown for ‘just you’ which is the risk for just the one client. But the next two columns are more interesting: what is the risk that one out of a couple will suffer one of these problems? That’s higher. It is also the number that is more of a concern to most of the people you are creating reports for. We also show the risk for one out of four business partners to show how the risk grows with the size of the group – ideal for business insurance discussions.

The risk percentage shown is the risk that between the client’s current age and age 65 they will experience the problem – death or disability for example.

There are some oddities we are often asked about. Why does a male smoker have a slightly lower working-life risk of temporary disability? That’s because of the higher numbers of early deaths.
Anyway. Do use the client risks report and see how it can help you discuss risks with your clients and hopefully get them to extend the range of cover that they buy. We hope it will also get them to buy cover for their partners and business partners.

Related articles

Cost of Illness Study

Do read and review the FMA conduct guide, released for consultation. Link. 

We have been meeting with advisers and reviewing the needs analysis Beta test with them. If you have used the needs analysis tool on Quotemonster please drop us a line and ask to join one of our focus groups - so we can make the tool better and better. We have already learned a lot from the advisers we have met so far. Version two is live and we're working on version three. 

Looking at some recent quote data we have noticed that sums insured are not tracking up in proportion to incomes. In fact, nothing like. This phenomenon has been noted before: it was picked up in the Massey research into insurance levels conducted about five years ago.

This is what we mean: for a couple with younger children where the average (mean) sum insured for life for an income of about $50,000 p.a. is about $510,000 the mean for those with incomes greater than $103,000 (more than double) is only about $830,000. It varies somewhat according to household composition.

But seeing it in the data from adviser quotes made me look harder at it – and wonder at the implications for needs analysis. There may be ways to change how you arrive at your ‘ideal’ or ‘recommended’ cover amounts that may help to nudge the cover values up.

The first is that the peer group for life insurance sales may cross income boundaries – meaning that people with higher incomes are averaging down the amounts of cover they think about because they are including lower income friends in their comparative set. Unlike, say, the market for cars, it is not obvious what ‘people like us’ buy in the way of insurance. If the insurance industry managed to make insurance an aspirational good which gets seen or talked about then this problem would disappear.

The second is that basing your ‘ideal’ or ‘recommended’ cover amounts heavily on income-based measures will widen the gap between your recommendation and the cover amounts likely to be eventually selected – maybe creating a ‘shock’ when you discuss it with them.

The third is that you may be better off building up recommended sums insured with fixed cost components rather than using income-based measures. Focusing on clearing debts, providing education funds, funeral expenses, and bequests should be added and agreed before then adding an income-based measure for the balance of the cover recommendation.

As we are now working on version three of the needs analysis in Quotemonster, if you are interested in this area please contact us. 

Here is an article from Jon-Paul Hale of Willowgrove Consulting discussing recent statistics of breast cancer diagnosis and deaths and how trauma insurance has stacked up when it is time to claim.

Infographic: Sourced from NZ Breast Cancer Foundation.

Scoop states'The AIA Healthy Kids Challenge uses leading NZ athletes to inspire, motivate and educate primary school children and their parents to lead healthier lives. International Rugby winger Cory Jane is getting behind the Challenge. Launched by AIA Insurance New Zealand, the five-week programme aims to inspire 15,000 primary school children to be active and eat well – all while having fun and learning.' Read more here.

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. 

According to this article on nbr.co.nz nib has increased its New Zealand customer base to 212,497 since buying OnePath's medical insurance book. The company has said "New Zealand continues to deliver on the targets set when we acquired the business,"

"For the 2017 financial year and beyond we expect profitability to further improve through organic growth and increased scale."

Here are Tony Vidler's tips to valuing the advice you give clients.