Results of FSC Financial Resilience Index, and more daily news

The FSC has released the latest Financial Resilience Index results. The latest results indicate that New Zealanders are still resilient and confident about financial matters. The index examined views on five indicators: financial confidence, literacy and preparedness, job security and wellbeing. 72% of participants reported that they feel reasonably, very or extremely confident in their financial standing.

“The latest round from the FSC’s Financial Resilience Index shows that despite the last six months being one of the most challenging periods in recent history, New Zealanders have remained remarkably resilient and confident when it comes to financial matters.

The Financial Resilience Index is a major tracking survey of New Zealanders’ views on five key financial resilience indicators: financial confidence, literacy and preparedness, job security and wellbeing.

“The responses in early August show that after initial uncertainty Kiwis remained resilient throughout this unprecedented period, from the introduction of Covid-19, to living in lockdown, right through to the return to alert level one,” says Richard Klipin, FSC chief executive.

“Despite these dramatic changes, New Zealanders continued to have incredible financial confidence, with around 72% of respondents still feeling reasonably, very or extremely confident when it came to their finances.”

The index found that although there is underlying anxiety, New Zealanders remain resilient. The FSC’s findings differs from the key findings of Cigna’s COVID-19 Global Impact Study, which highlighted that the majority of its 20,000 participants have a pessimistic view on their financial position.

In other news

Cigna: Cigna Parenting Survey 2020 found that 36% of parents surveyed had a will but no life insurance

FMA revealed that full licence provisions would be released mid-November  during FSC conference

Financial Advice: New board members announced at Financial Advice NZ


Aon to offer clients free wills, and more daily news

Aon has partnered with Footprint to offer current and new clients with corporate life insurance policies the option to have their wills drawn up free of cost. This partnership is designed to save clients estate admin fees and increase the number of full-time employees with wills in New Zealand.

“Aon is the first company in the sector to provide and cover the cost of Wills to all existing and new clients with a corporate life insurance policy through employee benefits – and already, several group insurers are engaged, with more to come. This industry-first move will see Aon provide security and education for all aspects of life insurance and end of life planning, saving people on average $5,000 in estate administration fees in instances where a life insurance policy has no Will attached to it.

Footprint chief executive Angela Vale says, “The data tells us New Zealanders are consistently under-Willed, especially in certain age groups. Only 37% of full-time employed people in New Zealand have a valid Will."”

Anson Davies, Aon Life general manager has said that the insurer has worked to understand what clients are looking for, while Geoff Blampied, Aon CEO stated that the industry has responded positively. Geoff continued by saying that the initiative could potentially reach 70,000 policyholders in the first phase.

“Aon Life general manager Anson Davies says, “We have done extensive due diligence to ascertain what our clients are looking for and what their employees value, and we are pleased to be launching this offer through our partnership with Footprint and in collaboration with key partners in the insurance industry”.

 

This is further supported by Aon NZ chief executive Geoff Blampied who says, “We are excited that the industry is responding positively to the initiative, which has the potential to reach around 70,000 Kiwi policyholders in the first phase.” Click here to read

In other news:

Asteron Life: Covid-19 support extended until 31 October 2020 for customers facing financial hardship

Asteron Life: MedScreen is currently not operating in Auckland while visits outside of Auckland will continue 

Nib: nib member support package has been extended to the end of September.

Financial Advice: Update on the Privacy Act webinar

What does ‘treat fairly’ mean in new conduct law?

 

 


Making a living will

Insurance is, of course, about planning for a future event before it happens. For life insurance, it is often described as a fundamentally altruistic purchase: you buy it to benefit someone else. Of course, the holder does enjoy a benefit, which is peace of mind. The planning helps us to relax a bit about the future, a future we know is coming for us: one day our life will end. Making a living will is also a kind of plan. A way to say some of the more difficult things, or put in focus some of the things you would most like to be remembered for. At this link you will find a beautiful article about a living will and what it meant to the family. https://www.huffpost.com/entry/ethical-will-legacy-letter-why-you-want-one_n_5eeb7a09c5b6c8594c7f2d03 About a ten minute read and well worth it. 


Daily news update: Partners Life predictions for increased suicide claims, and more stories

While there aren’t usually many suicide claims made, Partners Life is now predicting that there will be an increase in suicide claims in the foreseeable future. Naomi Ballantyne has linked the economic effects of the pandemic to increased mental health problems and self-harm.

“Life insurance company Partners Life expects a rise in suicide claims as a result of businesses failing in the economic downturn caused by the Covid-19.

"We've certainly experienced already suicides that are directly related to businesses being shut down," Ballantyne said.

The Covid-19 economic crisis was putting unprecedented pressure on businesses and their owners, and there have been predictions the pandemic could result in a rise in self-harm.

Business failure could have an intense emotional impact on individuals, and business failures were sometimes implicated as a factor contributing to owners' sudden deaths.

In desperation, people sometimes convinced themselves that their families would be better off with a payout on their life insurance policies than with them remaining alive, Ballantyne said.” Click here to read more

In other news:

FSCL: FSCL's 'allegations against a very senior parliamentary officer' This covers the issue of the right to use the word 'ombudsman'

Reinsurance sector won't achieve cost of capital in 2020, outlines Fitch Of course, many categories of business will not achieve their cost of capital. 

Financial advice saving retirement futures: Adviser This trend isn't confined to KiwiSaver advice either - events cause people to reflect on their contingency planning, including risk.

ASB: ASB to waive home loan interest, if a borrower dies


End of Life Choice Bill coverage focuses on insurers... it probably shouldn't

Katrina Williams, writing for stuff.co.nz has a piece on how life insurance companies may have to decide how to cope with the new End of Life Choice Bill if it becomes law.

The first thing to be clear about is that life insurers are bound by their current contracts in the marketplace. I don't think that the article is as straightforward about this as it should be - it therefore raises doubts about claims payment under current contracts that are not really there. As one insurer in the article relates, most insurance policies cover suicide provided that the policy has been in force for at least 13 months and there was no evident intention to defraud the insurer. 

Another point to note is that end of life choice typically happens in old age. Although the debate about euthanasia tends to highlight extreme cases - like cases of severe illness in younger people because of the tragedy of them - these are rare. When you examine these cases more closely they are often (although not always) as a result of long-pre-existing disorders, sometimes congenital. Few such people own life insurance, and few people hold life insurance into very old age where most end of life choices are likely to be made. The actual number of policies affected is likely to be small, and in most cases, these claims are being met already under payments for terminal illness, and eventual death, whatever the exact cause.

Insurers are conscious, also, of the risks of commenting on a subject where views vary considerably and feelings are strong. The business of an insurer is insurance, not political advocacy. Whatever the views of individual executives might be, their shared project is the business, and they are conscious of that particular, defined duty to their clients. That is evident in Richard Klipin's response, as CEO of the Financial Services Council: 

"The life insurance industry and individual companies will work in a careful, considered way to review policies to ensure that they remain fit for purpose, in line with international best practice, and continue to provide the support and coverage that New Zealanders expect," 

There are wider implications if the Bill becomes law. Product design must consider moral hazard, which may be slightly elevated in the case that a decision to end one's life is more acceptable and legal. These challenges, however, are usually successfully navigated in this market, as they have been in other markets. The existing moral hazard of the incentives to fraud and murder are very well managed by New Zealand insurers through the underwriting process and through the law. There are many issues to consider in the End of Life Choice Bill debate, but how insurance may operate is not the most important. 

Click here to read more. 


Aretha Franklin Died Without a Will, and Estate Issues Loom

Since 76 year old Aretha Franklin passed away recently it has come to light that she did not have a Will and there is now talk that her personal finances will be made public while her sons list themselves as "interested parties" in recent court documents. Click here to read more. 

I am always conscious when discussing a situation: I don't know what was going on for them. Aretha Franklin was beloved of many people - including me and my family - so it feels disrespectful to comment on Ms Franklin's estate arrangements. But if that name got you to read this blog post, and then get your own Will sorted out, then that will have been helpful. It is worth doing. You just don't know what is going to happen. Yes, I mean you.