Written by Andrew de Vine – Financial Adviser, Adelphi Insurance Brokers
05/09/2024
It’s probably important first to understand what a ‘hedge’ is in the finance world. You may have
been baffled by them in The Big Short or The Wolf of Wall Street but basically it’s a way to protect
against potential losses. For example, if you own a stock and worry that it might go down in
value, you could make a “hedge” by buying something that would go up in value if the stock goes
down, like an option or a different asset. It helps reduce risk, so if things don’t go your way, the
hedge helps offset some of the losses.
A better way to think about this is like playing defence in rugby union. Imagine your team is
ahead in the match, but the opposing side is known for making strong comebacks. Instead of
focusing only on scoring more tries (offense), you start positioning more players to defend your
line. By strengthening your defence (the hedge), you minimize the risk of the other team
breaking through and scoring. Just like in rugby, a hedge in finance helps protect you from
potential losses while still playing to win.
So how does health insurance protect you when you don’t get any money in to meet your
repayments or significantly reduce your debt? It’s no secret that most of the value you build into
your property portfolio is through capital gain, and this takes time to really accumulate to a
meaningful value or for rent incomes to actually provide a net gain.
With the fast increasing costs of medical treatments and aggressive progression of medical
technology (which only appears to be compounding) the variety & effectiveness of medical
treatments which can prolong and/or save lives means similar increases in medical costs.
Average cardiac & spinal surgeries are in the $80-$100,000 range. Life saving immunotherapy
drugs are somewhere between $14,000-$20,000/month with treatment ranges from 6months ++
on top of chemotherapy/radiotherapy & surgical expenses for cancer treatment.
If someone in your family was to suffer a major health event having good health cover can be a
defining feature to minimise stress and time to treatment. It can be the difference between
having to sell the cars, the investments and the home to meet lifesaving treatment costs in a
meaningful timeframe. Depending on your needs and strategy there are options available that
can make sure that your liability for a major health outcome is limited to $10,000 per person and
ensure that your monthly health insurance bill is affordable and maintainable for life, so that
when you are hit with the unexpected you don’t have to liquidate assets and investments before
they’ve had their time to shine.
If you have a business or investments you want to protect or simply would like to review your
existing insurances for the family to ensure you have the most optimal strategy for your needs I
would love to conduct a needs analysis and review. Please email or text me to book an
appointment.
There is no cost to this and the initial meeting is only 30mins.
021422813
adevine@ains.nz
