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Nearly all New Zealanders tend to insure their homes, contents, and cars, as one can see a tangible and immediate risk if the worst happens, but around 70% of Kiwis continue to be underinsured when it comes to life and health insurance, which are the solutions to protect their ability to earn income. This ability to earn income perhaps is their greatest asset over a lifetime.
New Zealand is one of the most underinsured nations in the OECD and our levels of risk are only increasing, putting at risk our hard-earned income. Insurance plays an important role in spreading the costs of risk that helps to ensure financial stability for New Zealanders through unexpected and difficult times.
A study from FSC (Financial Services Council)) 2023 has identified the key money issues facing New Zealanders:
1. New Zealanders worry about healthcare accessibility and affordability. 39% of Kiwis worry about the financial consequences of a significant health event (Money and You: Taking Cover, 2022).
2. New Zealanders take too much risk without managing the downside. 70% of Kiwis are underinsured (Money and You: Taking Cover, 2022). Only 22% reported having trauma/critical Illness Insurance; 20% reported having income insurance should they lose their job, and 17% reported having total and permanent disability insurance.
3. New Zealanders are facing a financial literacy and capability issue. 53% of Kiwis are unable to access $5,000 in time of emergency (Financial Resilience Index, 2023).
4. New Zealanders aren’t prepared for retirement, leading to stress and anxiety in later years. 56% of New Zealanders don’t feel they are financially prepared for retirement (Money and You: KiwiSaver at a Crossroads, 2021).
Those with life insurance cover see the positives such as:
- giving peace of mind and removing worry about the financial consequences of death or a significant event;
- a financially responsible thing to do that reduces stress from loved ones through a difficult period.
Latest FSC data* shows that the New Zealand life insurance industry supports around 4.1 million life insurance policies that include trauma, disability, and income insurances, and last year paid New Zealanders around $1.2 billion in claims to support them when they most needed it.
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Patrick Wang
