Family Budget

Insurance - protecting your family

Insurance - protecting your family

Once you have a family, unfortunate events such as loss of income, theft and damage to property can have devastating and long-lasting consequences. And while you cannot necessarily prevent these events from occurring, you can take out insurance to give you and your family financial safety should these events occur.

What type of insurance should I have?

To ensure that you are properly insured, consider the following common risks and the type of insurance you need

Common risks

Insurance product

What can reduce your insurance premiums

Damage or loss to a home building and fixtures

Home building / House insurance

Adequate maintenance, smoke detectors, sound electrical wiring

Loss of home contents

Home contents insurance

Window and door locks, burglar alarms, smoke detectors

Damage to someone else's vehicle or property

Third party property insurance

An accident free driving record

Loss or damage to your motor vehicle

Comprehensive insurance

Security devices

Death and total and permanent disability

Life insurance and total and permanent disability insurance procide a lump sum payment in the event of your death or permanent disability

Your health and lifestyle are factors taken into account when determining your premiums. The younger you are when you first get cover, the less likely health factors affect your premiums. Non smokers pay almost half. Shop around on-line, prices can vary significantly for the same cover.

Sickness and temporary disability

Serious illness (Trauma) insurance will provide you with a lump sum payment in the event that you are diagnosed and survive a serious illness like cancer or a heart attack. Income protection insurance provides cover in the event that your health or other event incurs you loss of income.

Your health and lifestyle will are factors taken into account when determining your premiums. Non smokers pay almost half. Shop around on-line, prices can vary significantly for the same cover.

Medical Insurance

Private health and hospital medical insurance is a health protection plan that covers your medical expenses and procedures in the event of illness.

Your past medical record is taken into account when making an application.


Replaces a portion of your regular incomes if you are made redundant. Is different from income protection insurance. Usually needs to be in place prior to 6 months before a claim can be made.


Find more about types of insurance here.

How much cover do I need?

If you make a claim, the maximum an insurer will pay you is the amount of money, or ‘sum insured’, in your contract. That sum has to cover everything.

Most people underestimate the value of what they own and ‘under-insure’. If you under-insure, you won’t get enough money to cover the total cost of your loss. For example, the ‘sum insured’ for your home must be enough to cover all your costs if your home were destroyed, including rubbish removal, temporary rental accommodation as well as rebuilding costs. Ask a builder or valuer to give you a realistic estimate.

Under-insurance can hurt in another way. Suppose you insure your home contents for $10,000, but they’re really worth $20,000. Your insurer may be allowed under your contract to pay only part of any loss or damage because you have insured your property for only part of what it’s worth. Check the Product Disclosure Statement for your insurance carefully.

How can I get the best cover?

Shop around and get a few quotes. To give you a quote, the insurer will ask you various questions. Answer all questions fully and honestly. You must tell them all the facts that could be relevant, otherwise the insurer may be entitled to refuse or reduce payment on a claim.


  • You may save on insurance premiums by agreeing to pay an ‘excess’.
  • Ask your insurer if ‘bundling’ several insurance policies will get you a reduction in your premium

Compare the actual cover offered in each quote. Go through what the policy covers and what it excludes with a fine-tooth comb. Many people find out only too late that something was not covered. Insurance covers only what’s defined in the policy and nothing else. A cheap policy that doesn’t cover what you need could be worse than a more expensive policy with unnecessary features. If you have special needs, seek expert advice before you take out insurance cover.

Useful links:

Find more relevant information managing your finances:

This article was created for Kidspot - New Zealand's leading parenting website.