When people think about protecting their financial future, Insurance naturally comes to mind, but there’s an important step that comes first – your emergency fund.
Having money set aside for unexpected expenses is one of the strongest financial habits you can build. It provides confidence, flexibility and breathing space when life throws you an unexpected challenge.
Emergency funds are built as your first line of financial protection in the event of one of life’s little bumps such as an unexpected car repair, a few weeks between jobs, an emergency trip to visit family, etc. Many financial experts recommend aiming for three to six months of essential living expenses (depending on your circumstances).
This fund fulfills a different purpose than Insurance. They are not alternatives – they work together.
When life events require more than just savings alone
Unexpected events such as a serious illness, significant injury or passing of a partner / income earner are not everyday emergencies – they are life changing events that affect income, savings and future financial plans. This is where Insurance becomes an important part of your overall strategy.
Insurance is your second layer of protection if the situation extends beyond what your savings were intended to manage.
Protecting more than just every-day bills
Insurance is more than just simply paying your mortgage or rent. Your income funds:
- Your family’s lifestyle
- Children’s education
- Retirement savings
- KiwiSaver contributions
- Holidays
- Home maintenance and more
For most households, a long-term interruption to income could mean drawing down on retirement savings, requesting a mortgage holiday, selling investments or making more difficult financial decisions sooner than planned. Insurance is designed to help reduce that financial pressure.
That’s why at Lifestyle Cover, we don’t believe in selling insurance policies. We build you a financial resilience strategy.
From there we tailor a protection plan that complements your existing financial position. Whether that’s recommending additional cover, or adjusting existing policies, we can help build the right combination of emergency savings and tailored insurance so, your financial protection is as individual as your life.
Why personalised advice matters here
There is no one-size-fits all insurance solution. The right amount of insurance depends on your financial buffer. Before we recommend any insurance, we take the time to complete an analysis and understand your position. We look at current emergency savings, your income, your financial commitments and goals. This allows us to recommend cover that compliments your exisiting financial position.
For example – someone with six months of living expenses saved may feel comfortable choosing a longer waiting period on their Income / Mortgage Protection policy because their savings are able to support them initially. A longer waiting period can also help reduce premiums.
On the other hand, someone with little or no emergency savings may prefer a shorter waiting period as they would need financial support sooner, should they be unable to work.
Different types of Insurance protects different risks
As everyone’s financial situation is unique, the type of cover and amount required will vary. The strategy is to have the right Insurance, based on your income, stage of life, financial commitments and goals.
If you are building your emergency fund, already have one in place, and want to understand where your current Insurance fits, we can help you make the right decisions to safeguard what matters most.
This article is intended as general information only and should not be considered personalised financial advice. Insurance recommendations should always be based on your individual circumstances, financial objectives, existing cover and the terms and conditions of each policy. Lifestyle Cover can help you understand your options and tailor a protection strategy that’s appropriate for your needs.