New research commissioned by the Financial Services Council (FSC) has revealed the high number of New Zealanders who are underinsured when it comes to their lives, their incomes or suffering a major illness.
The FSC’s research series on New Zealanders’ attitudes to financial risk, “Gambling on Life”, found that while many New Zealanders are aware of the importance of types of life insurance, this isn’t reflected in adequate levels of cover for themselves,” said Mr Richard Klipin, CEO of the FSC.
The study looked at the three main types of life insurance available in New Zealand; life insurance, income protection/mortgage repayment insurance and critical illness insurance. It focuses on the life insurance gap to understand the reasons behind underinsurance and the potential risks that some Kiwis expose themselves to.
Critical illness showed the highest level of underinsurance with only an estimated 9% of Kiwis being sufficiently insured, followed by 11% who had adequate income protection/mortgage repayment insurance and 29% with adequate life insurance.
“It is important to remember that not all Kiwis need these types of insurance: for example, retirees are less likely to need income protection if they no longer work and have paid down their mortgage.
“For others, the research highlights some of the reasons for underinsurance, which includes affordability, priority, trust, self-insurance and complexity.”