Partners Papers
Reece ’ s story ...
Reece was a fit , healthy young guy with a busy life and a young family . He had an active , physical job as a builder and was a keen sportsman - a yachtsman , cyclist and runner who had recently completed his first marathon . At 38 , life was good .
In September 2014 , what started out as a normal work day on site at Paremoremo soon changed when Reece collapsed and fell from the 2nd rung of his ladder . His workmates rushed over thinking he may have had an epileptic fit , only to find him unconscious . About 4 minutes passed with Reece slowly regaining consciousness , much to the relief of his workmates . An ambulance was dispatched despite Reece ’ s protests – he thought it unnecessary and was already contemplating a quick return to work .
Upon the arrival of the ambulance the medics conducted their routine checks , assessing and quickly deciding on an urgent transfer to North Shore Hospital . The ambulance team warned Reece a sizeable medical team would await his arrival . A team of 12 , including a nurse Reece knew from his local rugby league club , greeted him . The nurse called to break the shocking news to Reece ’ s partner Emma : Reece was in critical care at North Shore hospital with a suspected heart attack .
Emma arrived scared and frightened . The long journey had begun . In the following days , the Specialist team caring for Reece eliminated a heart attack before diagnosing non-ischemic severe cardiomyopathy , or in layman terms - decreased heart function to the point of heart failure , likely caused by a virus attacking his heart . Unfortunately , this was not something which could be fixed with surgery and a handful of pills . After an initial period of stabilisation , Reece underwent the first of two surgeries to implant a pacemaker and defibrillator . A long , uncertain rehabilitation lay ahead .
In many ways Reece could have considered himself unlucky . He was young and fit with no risk factors and no previous health issues , but he was struck down by a virus which attacked his heart - a fairly rare event . Luck was with Reece in one way however , not even 12 months prior to the fateful day , Reece ’ s financial adviser had recommended Reece and Emma review their insurances . He suggested a comprehensive bundle of products including Life Cover , Trauma Cover , Total and Permanent Disability Cover ( TPD ), Mortgage Repayment Cover ( MRC ) and Premium Cover . Thankfully Reece and Emma had followed his advice and a potentially devastating financial blow was minimised .
The lump sum trauma payment was received , with his MRC payments commencing after the 8-week waiting period he had selected . His financial worries were taken care of , meaning Reece could focus on his recovery without the ongoing stress of financial uncertainty .
Over the next few months Reece developed a close relationship with his medical team as he learned to monitor and manage his condition . Until this point , Reece had not returned to work . There came a day when he asked the question of his specialist : could he realistically expect to return to his trade , the only job he ’ d ever known ? If Reece had worked in a less physical capacity the answer would have been easy , however it was not so black and white . Even with a pacemaker and a defibrillator , there was a risk his heart , if pushed too hard , could stop and he could collapse - a risk to him and potentially his workmates . Reece ’ s TPD insurance provided coverage in the case that he was unable to return to his own occupation and with this determination being made by his specialist , the lump sum TPD payment was made .
Regular MRC payments continued but 12 months into his recovery Reece began thinking about his future . He ’ d always loved his job . He enjoyed working . He needed to work . It gave him a sense of purpose in addition to much needed social and mental stimulation . What did the future hold ? After contemplation and research , Reece settled on a Bachelor of Business ( Property and Valuation ) with plans to become a Valuer . Partners Life funded Reece ’ s university studies with the Vocational Retraining and Rehabilitation Benefit provided under his MRC insurance .
His health stable , Reece graduated and returned to work in the middle of 2017 . He is unequivocal about the impact his policy had . “ Our Partners Life insurance gave us back some power , it provided us with choices and meant I could do what was best for me , my health and my family without having to worry about the financial implications . Along the way , all the decisions have been ours to make , we were never forced into anything by the situation we found ourselves in ”.
“ Whilst I would never have wished for this to happen , it could have been so much worse . We could have been ruined financially , with the pressures impacting our marriage
and our futures . As it happens we are in a strong position financially and we have a bright future to look forward to ”.
A happy footnote .
2016 : a leap year caught Reece by surprise . After 10 years Emma proposed and a wedding followed . In July 2017 they welcomed their 2nd son , after 7 years of trying .
How are premiums made ?
Have you ever wondered how premiums are calculated ? Have you ever noticed that your spouse , partner or children have different premiums for similar or identical cover ? Let ’ s try to make sense of the dollars and cents !
The premium for your benefits are based on actuarial statistics , or data that is gathered , compiled and studied by an Actuary .
In simple terms , an Actuary is someone who deals with the measurement and management of risk or uncertainty . In the insurance industry , an Actuary is responsible for analysing the possible outcomes of the types of events that could potentially result in claims .
The more likely you are to claim , the higher your premiums will be . This is the life insurance version of “ user pays ” and helps ensure that the widest possible mix of both healthy and not so healthy clients are attracted to buy insurance , so that the collective risk of claims can be spread amongst this wide mix of clients .
While In New Zealand , the Human Rights Act 1993 protects individuals from discrimination on the basis of age , gender and disability , the Act does provide a specific exception for Life Insurers .
Life Insurers are allowed to price differently on the basis of age , gender and disability provided that this different treatment is supported by actuarial or statistical data , clearly showing different risk profiles for people of different demographics . If no actuarial or statistical data is available for a particular demographic ( for example , an individual with a very rare combination of diseases or disorders ), pricing based on expert medical opinion of the risk is also allowed .
The easiest way to understand this is to look at a few examples :
• Life cover is priced based on an individual ’ s risk of dying in a particular year , regardless of the cause . In most cases , premiums would be expected to increase each year as an individual grows older and becomes increasingly exposed to certain life threatening diseases . However , in the case of young men between the ages of 20 and 35 , premiums actually go down year-on-year . This reflects the decreasing risk of accidental death over this age range .
• Trauma benefits are priced for an individual ’ s risk of suffering from one of the covered conditions in any particular year . In younger age groups , the risk for both males and females are fairly similar , which means premiums are fairly similar for both genders until around age 45 . After this age , the risk of a male suffering a cardiovascular event such as heart attack or stroke becomes significantly higher than the equivalent risk for a female and Trauma premiums , therefore , become more expensive for men than women from that point onwards .
• Monthly disability benefits are priced based on both an individual ’ s risk of making a claim and the likely duration of that claim . While the overall number of claims made by each gender are reasonably similar , the average duration of claims for females tends to be higher across all age groups , which leads to higher premiums for women on Income Protection products than men .
This difference might be explained by looking at most common claim causes amongst each gender . Short-term accident related disability claims are higher for men , while longer term claims such as those arising from mental health are higher for women . This does not necessarily mean the incidence of mental health conditions are higher amongst women , perhaps it is because women might be more likely to seek medical help and take time off work to recover fully . While this does mean that Income Protection is more expensive for women as a result of the longer average claim duration , it might also explain why other products such as life cover are relatively cheaper for women than men i . e . seeking medical assistance and taking time off work to recover may ultimately lead to a better health outcome in the longer term .
The principal of insurance is that we pay regular premiums to an insurer so that if and when an unexpected , significant health event occurs which could have a catastrophic financial impact on our lives , the insurer is able to use the premiums it has collected from all of its clients to pay that individual a significant sum of money , which they would not have access to otherwise .
I ’ m sure we ’ d all love to go through life without experiencing unexpected , undesirable health events , meaning we arrive at our old age having never needed to claim against our insurance policy ( and complaining about what a waste of money it was ), however it is good to know that if we are not so lucky , there has been science behind the premiums that we have paid in order to deliver the financial support we are now able to benefit from .
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