Insurance, inflation and your financial resilience

February 3, 2023

Since New Zealand’s rate of inflation took off in late 2021, it’s been top of the agenda in lots of people’s discussions about their personal finances.

As the cost-of-living pressure has gone on, it’s prompted a lot of us to go back to the basics, reassessing our budgets and ensuring we have things like emergency funds in place to cover a potential rainy day.

Financial resilience is more important than ever in a high-inflation environment, and insurance can help you shore up your defences.

Keeping you on track

One of the greatest benefits of insurance is that it can help you keep going, no matter what happens. When inflation is higher, there may be less space in your budget to put money aside for unforeseen expenses. That’s where insurance can be even more important to step in to help.

Having adequate income protection or mortgage and rent cover means that, if you’re unable to work due to a serious illness or injury, you have the security of knowing money will be coming in to help cover your expenses, after your wait period ends.

This is extra important peace of mind when prices feel like they are rising every week.

In high-inflation environments, the value of some of your other investment assets might be down, so having solid life insurance policies in place could also be a big help. When investment markets are tougher, your family might not have the same nest egg to rely on, so a life insurance policy claim could make a big difference. It could provide financial help to your family were something to happen to you, meaning they would not be forced to sell assets in a tougher market.

Hold on to your insurance assets

When you’re looking through your budget for something to cut to save money, it’s vital that you don’t give up your insurance policies without a thorough examination of your options.

Insurance is a lifeline rather than a hindrance in tighter times – if you give up a policy it can be hard to get another on the same terms. If you’re worried about your budget or how you’ll cover the cost of your insurance, get in touch. There may be ways to reduce the cost, even temporarily, while retaining the cover that you need.

It’s only too common for people to give up an insurance policy and then find soon after they wished they still had it.

Time to update your safety net?

It’s important to keep your insurance plan up-to-date and in line with your personal circumstances. If it’s been a while since we did a review of your policies, don’t hesitate to contact us. We can check if your cover is still appropriate and whether there are other policies that might work as well, or instead, of what you have.

It’s a good idea to review your insurance every year or when something major happens in your life.

Like to talk?

Now is a good time to make sure your financial life is in tip-top shape. If you’d like to talk about how insurance can boost your resilience, give us a call today. We can work through the policies you currently have and what might need to change in future.