Renting while being self-employed? Rent Insurance!
If you belong to the “self-employed” cohort, you know you are doing the right thing for yourself, your family and most importantly for your future. You take care of your income without being dependent on the mercy of your employer.
You are in control of your next morning, next week and even next month. You know your work flow depends on your willingness to work. Yet, if you want to take a break for a Fiji holiday, you can do it at any time.
There are some risks for self-employed
This post is about money, money as we know it. Would you agree being self-employed can be tough only due to the fact that one day, well one week… there is no work. Zilch, nada, absolutely nothing… and this is the time when your brain switches on “search” mode and in a day or two YOU, as usual, find yourself a new project.
This brings even more satisfaction. You feel “on the top of the world”. You know: You are in CONTROL.
However, this can change in a minute. Sorry for bringing you down. After all, money as we know for most of us never certain especially for self-employed people. It is not “money” as we know – it is the ability to feel comfortable and be in the position to afford things we WANT.
There are two risk factors in the story above… YOUR story. At least two risk factors… and if your partner is also self-employed, then the risk you have in your lives multiplies.
If you have kids and you are the only one responsible in your family for bringing an income, then the risks become even greater.
I can feel shivers running down my spine even while writing about risk situations many New Zealanders face each and every day. New Zealanders, the government is proudest of due to the fact that people like you do not ask for anything… they are happy to work, produce income for themselves and drive economic prosperity of the country we all live in.
Now, let’s look at what is available for people in your situation
Self-employed from financial contingency point of view
You know in New Zealand we have ACC. The organisation pays to all New Zealanders who suffer an accident and cannot work due to a temporarily or permanent disability.
Example is here: Imagine you had an accident (you broke your leg) this means – ACC will pay you 80% of your pre-disability income. The benefit ACC pays to anyone always based on taxable income. That’s right – YOUR taxable income…
Taxable income… Did I say you are self-employed and most likely drive your taxable income to the level where your accountant feels slightly uncomfortable…
80% sounds good at least that level of income would allow you to “manage” your bills.
Wait a second what if ACC has the last year information when your income was not as high as it is now? Or what if ACC does not even know about you (I know a few people who pay nothing to ACC).
What happens then? Think!
You are right: this can be really scary…
An interesting fact about human brain is – it can switch itself of from a though the host is not comfortable to think about… Humans call it “positive” thinking (:-D).
Benefit ACC would pay you in any circumstances is always based on what ACC knows about you and your taxable income. The fact that you are earning more this year becomes irrelevant. If you not happy with the amount you are in title to receive from ACC – then talk to WINZ and get support benefit.
Every week there is a story in the local newspaper about someone who suffered a major illness. Sad read, really. Imagine if that article was about you… What would you do? Did you know: ACC pays nothing if you are sick with cancer or heart attack???
ACC pays nothing for a SICKness
Most New Zealanders face a tough financial situation in the event I have described above: Being diagnosed with one major illness.
According to “Financial Services Council” in New Zealand each year there are 54,800 households experience a sickness causing 3 or more months when people cannot work. Only 1 out of 8 households have any form of income protection…
Grim reality huh?
Think about your friends, those of them who had separated with their previous partners: 50% of divorces in New Zealand apparently due to financial dissatisfaction. Huh – nothing new right?
This post is about money and about how to make sure that someone like you has financial ability to pay rent and yet be able to pay the bills.
Many self-employed people in New Zealand are not aware of this financial solution: Rental insurance – the policy is designed to pay you 110% of your rental payments.
What is really exciting, in New Zealand many people are aware of mortgage insurance, however vast majority of New Zealanders do not know about the existence of rental insurance. From insurance industry’s point of view, it is the same product and works on the same principal: Insuring a certain expense. It does not really matter you insure your mortgage or your rental payment – it is same product.
I have to mention here that not all New Zealand insurance companies offer this type of product:
When you have your mortgage amount it is by definition “certain expense” and therefore this amount can be insured. Same happens with rent insurance: The amount of rent is known and subsequently can be insured.
Both mortgage protection and rent insurance allow insuring 110% of the payable amount. This means that you always have 100% of your mortgage or rent payment and additional 10% to cover some of your bills.
Let me explain how Rent Insurance works
Your weekly rent payment is $400 therefore you can insure $440 as you can see $400 will pay for your rent and $40 will cover some of your bills. Surely it is not enough but yet better than nothing. Would you agree?!? What is better to be sick and no money or be sick and at least to be able to cover rent payments?
How many friends of yours have rent insurance? The answer most likely is you do not know. The point I am trying to make here is:
Our parents barely taught us about money, neither the school system in New Zealand. Once you became a self-employed or start to call yourself an entrepreneur and employ other people, your horizons change and the level of your responsibility increases ten-folds.
In my business, not many days go by without a claim. There are sad ones: When someone has to submit a death claim or even worse when someone claims on his or her income protection…
For majority of small business owners, a serious sickness means “business death”
Allow me one more example:
One of my friends had a very successful “Locksmith” business. He was employing a few guys and had a shop on a busy road.
You know what I’m saying right? It means that it was him who was responsible for finding new work and for rent payments for his shop… Not to mention about all his bills and his girlfriend “High Hill shoe” passion…
One day, he did not feel right… Later after a few weeks he started to lose weight… Then didn’t feel well at all. It took doctors a few months to come up with his diagnose. By that time, he was lying in his bed most of the time… He did not want to work at all, he was weak and pale.
In the meantime, he had to let the guys “go” (his emplpoyees) and close his shop.
His partner of the time thought he had a mental breakdown or something and after a few arguments she walked away.
For him it was autoimmune disease. Who would have thought… according to Wikipedia ”There are more than 80 illnesses caused by autoimmunity. An autoimmune disease affects approximately 2%-5% of the western world’s population.”
The moral of the story is: If my friend did have rent insurance he would have kept his business at least … and most likely the relationship…
If you wonder what makes me capable of discussing your Rent Insurance – allow me to introduce myself: My name is Vlad Ivanov, I am an Authorised Financial Adviser and it is my business to help people to navigate through different insurance policies, making sure they have the right one for the best premium.
I look forward to hearing from you.
Below you can see additional benefits rent insurance can provide you with. Don’t wait, insurance is always based on your health and as we just discussed “health” can change at any time. Request your quote now and put rent insurance in place. Just to know that you always have money no matter what happens…