Common Insurance Mistakes

AI Interviewer: Welcome — thanks for joining the conversation today. Ready to go?
Advisor: Yes, ready.
AI Interviewer: Great. To begin, what do you see as the most common insurance mistake people in their thirties and forties make in New Zealand?
Advisor: Canceling their insurance rather than optimizing it.
AI Interviewer: That's interesting. Could you elaborate on what you mean by "optimizing it" instead of canceling?
Advisor: Well, insurance needs to be right-sized, needs to be appropriate for your life stage and your risk profile. And as you get older, actually your risk increases, your likelihood of needing to claim increases. So rather than canceling your insurance, you are much better off choosing a lower investment if money is tight and still mitigating most of your risks.
AI Interviewer: That makes sense. So, would you say a common mistake is not adjusting coverage as life circumstances change?
Advisor: Agreed. Yes, spot on.
AI Interviewer: What's another common mistake you often see among this age group?
Advisor: They don't review their insurance enough, so they're not actively driving the outcomes that insurance is meant to enable.
AI Interviewer: Could you give a concrete example of how not reviewing their insurance leads to negative outcomes?
Advisor: Well, imagine you're 21 years old and you have a small amount of life insurance and you've got a little bit of health insurance. And over the years, you ignore the correspondence regarding reviews and maybe you get married or you have a child or you buy a house. Now your risk profile has changed substantially and what you would want to happen in the event that something bad happens, that you encounter a claim moment, is that you would be well handled in that event. But if you don't review, you don't change your insurance stance and your risk profile goes up.
AI Interviewer: That's a very clear example. So, the insurance they have might be completely inadequate for their current life. What would you say is the third most common mistake?