Welcome to Bridge Financial
I’m an independent financial adviser that specialises in helping business owners with their ACC and Risk Management Planning.
The information and video’s set out on this page has been established to help you understand how to get the most out of your ACC and Insurances, without the sales pressure or hype.
It has been collated for you, in the hope that it may help you understand an unconventional but logical method of protecting your financial future.
A method that includes both your short AND long-term goals and truly has your best interest at heart.
Please understand, this information is for educational purposes only and is not intended to be personal advice for your unique situation.
Chris George, Director - ACC & Risk Insurance Adviser - 021 028 26357
Accident Compensation Corporation (ACC)
Many business owners are unaware of their options with ACC. When you start in business, there isn’t a lot of information available to help you in your quest for success. This often leads to a lot of extra stress to the business owner plus a lot of extra time and money figuring it all out.
Belonging to an ACC plan is compulsory for business owners. What most business owners don’t know is where their money is going for that plan, and additionally what those levies are buying them. As a business owner, your ACC levies are effectively buying you a low-quality income protection and accidental death insurance plan at a high-quality price.
If you are taking drawings from the business and are not on PAYE, you may have the option to restructure your ACC plan and go private with your cover instead of relying on ACC’s low-quality cover and service.
So, it makes sense to go private?
The rest of this page is designed to give you the foundational knowledge that is necessary when initiating a sustainable private insurance backup plan.
These strategies have saved my clients $1,000’s on their ACC levies. But most importantly, they have saved $10,000’s on their risk insurance premiums and reduced the risk on their financial future significantly. You will learn the fundamentals of how to ensure your backup plan is cost sustainable for you over time, so you don’t become an under-insured statistic.
As you read and learn the detail on this page, you will learn strategies that are largely misconstrued by insurance brokers, bank insurance specialists and therefore the consumers.
As a small to medium sized business owner, your business is likely to be the main source of your income, and therefore the foundation of your plan towards retirement. So, we need to get the protecting side of your income, right!
If your income stops for any reason, will your financial plan and everything you are building towards for your retirement stop too? If you cannot work in your business due to illness or injury, what is your backup plan?
The foundation of a business plan is sound risk management. Unfortunately, risk management planning in New Zealand is commonly misunderstood, and therefore it is generally not given precedence. Because sound risk management planning is commonly a low priority, many New Zealanders have not bothered to implement anything. Or if they have, their covers are often incorrectly structured to their needs, for both the short and long-term. They are subsequently paying too much to both ACC and/or their private risk insurance company and have not thought about how their insurance needs to look through their highest risk years leading up to retirement.
Why are many Kiwi’s having to cancel their insurance early?
Once you have a backup plan for the scenario of illness or injury pulling you out of work, the next question you need to ask is;
Is the cost of my backup plan sustainable?
Or put a different way –
‘Will my premiums be affordable in 10 years’ time?'
Most business owners who set-up their backup plan have not been made aware to ask this vital question. Subsequently, most are unaware that if they did ask this question, the answer would be NO, as the cost is not setup to be sustainable.
If you have a backup plan in place, are your premiums for your key person or income protection cover going up every year? Check your policy wordings!
Do premiums have to keep going up?
If the cost of your backup plan is not sustainable for the period you need the plan, there is a high chance that your plan will not be there to help you when you need it – statistically, you will probably cancel it early.
When people cancel their plan early, they don't get any of that money back - and they also have no insurance through their higher claiming years leading up to retirement.
Every situation is different, but most business owners need to have their backup plan in place through their 50’s and 60’s as they're saving and investing for retirement. Unfortunately, most are having to run the risk without it.
What is the TRUE cost of the insurance?
When you buy an investment, do you ask what the cost of that investment is and then assess the potential of the return? This would seem like common sense, right?
So why aren’t we asking the same question when we buy our financial backup plan? It is an investment after all.
The same thinking should be applied to your backup plan investment, but it is rarely applied. Unfortunately, we have been conditioned to focus ONLY on the price today, which is not the true price of the investment.
The true price is the TOTAL price (or cumulative price) of the plan. The total price is what you need to know to make an educated investment decision for your cover.
Do you know the total price of your current insurance plan?
What does a good adviser do for you?
Every business or person has different needs and a different budget. They also have a different aptitude to risk. Some prefer to outsource all risk to an insurance company, some prefer to take all the risk on themselves (self-insurance), and some prefer to find a balance between both options. An adviser guides you through finding your own personal aptitude to risk.
Additionally, most need the ability to tailor their plan to their long and short-term needs. As your business and life changes, your plan changes. An adviser helps you maintain your plan through those changes.
As claims arise, an adviser backs your cause and manages the claim for you. With experience, I’ve found that I usually know the contract better than many of the employees in the claims departments, so this is where an adviser’s true value lies.
Do I have your best interest at heart?
My service is at no charge. So, what’s the catch?
You are probably asking how I get paid and whether my true motivation is in your best interest. It's necessary for me to explain how this works because if we are to do business together, it’s important you know why, and that I do have your best interest in mind.
When you work with a risk insurance adviser in NZ, the adviser is remunerated for his time by the insurance company you put your insurance with. You as the client, do not generally pay a fee to the adviser. So how do you know that the adviser is working in your best interest with the multitude of insurance companies incentivising advisers in different ways to put business with them?
It is simple: It is HOW we get paid, not just WHAT we get paid.
Here’s how it works;
An upfront commission is paid to the adviser when you take the policy out. The upfront is a percentage of your annual premium, the percentage differs from insurer to insurer. A trail or renewal commission is then paid to the adviser (as you pay your premiums) after the first 12 months of your policy.
Every time you pay your premium, the adviser receives a percentage to cover the cost involved. This helps the adviser cover the ongoing maintenance and claims management cost of your policy.
The adviser then has a two-year responsibility period. This means that if you cancel your policy within two years, a large percentage of the adviser’s upfront commission is ‘clawed-back’ by the insurer. Essentially, the adviser doesn’t get paid.
So, here’s what I’ve found is the main driver for whether people have a short or long-term/regular contact with their adviser. It comes down to adviser incentive.
There are two main ways an adviser can choose to be paid by the insurer.
1. A higher upfront commission and a lower trail commission OR
2. A lower upfront commission and a higher trail commission
Bridge Financial opts for Number 2. A lower upfront commission and a higher trail commission.
I believe in doing right by people. If you do right by people, you create a win-win situation and that is the true meaning of sustainability in business.
By taking on a smaller upfront commission, I am running the risk of losing money if you cancel your policy within 5 years. I would have received more if I had opted for an upfront commission. I do have the option to opt for a higher upfront commission, but I don’t feel it serves you right as my client as it is harder to find time to service your policy and help you with claims over time if I have already been paid.
If I opt for an upfront commission model, I’ll always be searching for new business and the trail commission won’t be enough. This takes my priority away from servicing your policy.
By opting for Number 2, I am backing the idea that I will be there for you long-term and therefore you will be a client for the long-term.
I believe you will be a client for the long-term because;
Your premiums will be setup to remain sustainable
I treat you how I would like to be treated
I have the same cover for my business, lifestyle and family that a recommend for my clients
To me, it is all about sustainability and creating a Win, Win, Win relationship.
A Win, Win, Win Relationship
Like any relationship in life, it is crucial for all parties to benefit as equally as possible.
If one party in the relationship is benefiting less than another, resentment often creeps in and the relationship often fails.
Initiating an insurance plan is no different, and creating a Win for all parties must be the priority.
The three parties involved in your insurance plan are;
So, let’s start with you.
You are winning because your premiums will stay affordable. You will not be driven to cancelling your policy before you are ready to, due to escalating insurance premiums. This will allow you to retain your cover through to the point you are able to retire with little or no debt, and a passive income source or sources.
This significantly lessons your risk of a serious illness or disability striking with no cover in place, putting your entire retirement plan at risk.
Then there’s the insurer.
The insurer wins by retaining you as long-term client. A life insurance company in New Zealand doesn’t make money until you have been on their books for at least five years. The average period people retain their cover with one provider in New Zealand is around that time frame.
The trend is that many are trying to solve their affordability issues by shifting to other insurance companies periodically, only to find themselves in the same unaffordable position after a mere few years. They are also having to take on unnecessary exclusions and adverse policy terms every time they shift insurers.
This model is not sustainable for you the consumer , or the insurance companies, or me the adviser.
If an insurer has you on their books long-term (because you can afford the premium) they are building sustainability into their financial position and they become stronger and more secure over time. The likelihood of you leaving is reduced. Therefor a win for them too.
Then lastly, there’s the adviser.
As the adviser, I win by having you stay on as a long-term client. It’s that simple.
The Bridge Financial Service
Keeping in touch over the years you have your policy is foundational to ensuring your cover is appropriate to your needs if a claim arises.
This video below is emailed to you every year with your personal or business cover summary upon your policy renewing. It ensures you are reminded to keep it all in check.
The Bridge Financial Guarantee
If you have a claim you will receive our full attention to manage it with priority. You will get a 100% focus.
You will only be placed with insurers that are credible, financially stable and have an excellent history of paying claims fairly.
Your plan will be maintained and adjusted to meet your needs as your life changes. Our relationship is long term.
You will not be switched from company to company periodically. Our business plan, like your insurance plan, will be sustainable.
You will be placed with premium quality cover that is market leading and dependable. Not just now, but for the future.
You will save a substantial amount of money over the policy lifetime as we will lock in the cost of the cover you'll need long term. The cost of your insurance plan will remain affordable through the years you need it the most.
You will only be advised to have the amount of insurance or the type of cover that you need, and no more. We do not have sales targets to meet. We benefit by keeping you as a long-term client.
Bridge Financial will remain a client-centric service.
Thank you for taking the time to digest this information. I hope you learnt something you can utilise in your business and personal life.
If you have enjoyed this information and feel like you need to understand your options further, please feel free to reach out.
Chris George FSP 209525
Director - ACC & Risk Insurance Adviser