Insurance Cover and Policy Wording Passback - what does this mean?

It used to be that the only insurance cover that you could purchase was life insurance.  You insured yourself, you died, the money

got paid to your estate or beneficiaries.

Things have changed. Now we earn (and spend) more and medical technology has advanced, people are living longer and surviving major illnesses and injuries.  The core insurances that conscientious people have in place to protect their financial situation are insurances that pay out while they are still alive.

Life insurance pretty much stays as it is (but even it has become more complicated, we will write a separate blog post on how to differentiate), but the advent of trauma insurance, income protection insurance and health insurance means that different insurers have different quality policies.

This also means that as medicine progresses and the insurance provider market becomes more competitive, the policy wordings change.  Since 2011, in New Zealand, the leading insurance companies have revamped the cover provided by their trauma policies in particular, but also the life, income protection insurance and health insurance cover.

What this means for you, is that if you have an older trauma insurance policy, you may find that you arenot covered for something that you might consider to be a traumatic condition.  For example, a 1998 trauma policy may well not cover 'intra ductile invasive cancer', or other cancers.  If your doctor tells you that you have had a heart attack and you have trauma insurance cover, wouldn't you expect to be able to be paid out?  After all, that is why you put the insurance cover in place!

The modern policies of the leading insurers now have a feature called 'policy wording pass back', which Moneyworks believes to be a vital feature of any insurance policy going forward.  This means that if you put in place a new policy with these companies now, any changes that they make in the future will be 'passed back' to you - usually only if they are advantageous.  Generally the wording that would apply would be the best wording for your situation (the new wording or the existing wording on your original policy.)

Unfortunately a number of insurers do NOT OFFER Policy Wording Passbacks.  What this means is:

1. If you take out a new policy now, it will not evolve with the times, butmore importantly

2. If you have a policy older than 2011 - you may not be covered as extensively as you imagine.

Have a think about getting an audit of the options of insurance cover for you, and check the new policies against what you currently have.  At the same time, have a look at whether you have the right combination and levels of cover.

After all, what is the point of having insurance cover if it doesn't work when you expect it to?

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