Advice matters
Insurance in retirement: Here’s what you need to know

Many people start to manage their budgets a little more carefully when they are getting closer to retirement.

When you’re on a fixed income, or soon to be, you might find it helpful to prioritise spending on what’s most important to you.

But research from the Retirement Commission found that health insurance was often an “early casualty” for people tightening their budgets, at a time when it was often needed the most.

Why does that matter?

As we get older, we often have more cause to call on insurance for help.

The Retirement Commission research found degenerative conditions were common among older New Zealanders and could result in an “insidious decline in the quality of life”.

Sudden or unexpected conditions or accidents could also place additional burdens – physical and financial – on people.

The researchers found that people who did not have health insurance were reliant on a public health system that could often not assist in a timely manner. In addition, some participants in the survey had found that ACC was more likely to decline ongoing treatment for older people due to the assumption of ‘wear and tear’.

Having health insurance could mean the difference between waiting on a public list, or being seen more promptly in the private healthcare system.

Many people expected to be more financially secure as they got older, the research found. But that was not always possible because of “life shocks” such as divorce or redundancy. Some people were asset-rich but cash-poor and could not cover a sudden major health-related expense.

“For those that find any form of health insurance beyond their means, access to public health services like x-rays/other imaging is reportedly fairly prompt (within a matter of weeks), but specialists take more time to see (up to several months). Surgery waiting lists represent the biggest hurdle our participants face in accessing care through the public health system – for some conditions like hip or eye surgery the waitlist is several years long. While people wait their turn for the procedure, their condition slowly gets worse, reducing their quality of life.”

Insurance can help

The research found that people without health cover were often making trade-offs – deciding not to spend money on other things, or choosing which disability to treat so that they could afford private care.

But one of the participants in its research who had health insurance showed how valuable it could be.

“’Lisa’ has managed the significant expense of health insurance by increasing the excess to $1000 and moving to a surgery-only policy. It has proven well worth it though as it has enabled $70,000 worth of surgery for breast cancer, an ankle fusion and two hip replacements,” the report noted.

Options in the Public Sector

There are various supports available for older people with health conditions in the public sector, but they do have limitations.

ACC will cover injuries that occur as the result of an accident, but as the research noted, it does not cover degenerative conditions. As people get older, it becomes increasingly challenging to prove that there is no element of this.

There may also be a disability allowance available to people who have a disability or condition expected to last at least six months and incurring ongoing costs not covered by another agency.

The allowance can be up to just over $75 a week, untaxed.  But only about 15% of people aged over 65 currently receive the allowance, which the Retirement Commission said was probably due to it being means-tested.

It may also be possible to get loans from the Ministry of Social Development for things such as glasses, but they need to be paid back. A hearing aid grant is available but does not cover the cost of many people’s modern devices.

Keeping Insurance Affordable

Although premiums can become more expensive for health insurance as you age, there are still a range of options available. Targeting the aspects that you most want cover for can help to reduce the premiums, and that’s where we come in.

As advisers, we can help you work through which aspects of your health insurance are most important to you, and how you can maximize those, as well as managing any budget concerns you may have.

Ready to talk?

If you’re thinking about how to ensure your insurance continues to be a good fit for your circumstances and your budget, drop us a line. We can help you look at the options available and determine the most appropriate policies for your needs.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.