There is a lack of suitable insurance products targeting people with a low income, research shows.
According to financial comparison website MoneyHub, while most insurance policies offer monthly payments that help customers spread payments over the year, more often than not the total cost of these monthly payments can be 10-20% higher than if the policy was pre-paid up front.
Its car insurance research also suggests instances where policies for the same car would cost more in low-income areas than in wealthier suburbs.
“An ideal low-income insurance policy would have a low excess and monthly payments in line with the annual policy price,” MoneyHub senior researcher Christopher Walsh said. “We are realistic that insurance is a business, but, as the situation is today, those with the lowest incomes will often pay the most for their insurance needs one way or another.
“It’s absolutely critical that to build up financial resilience among every New Zealander there needs to be advancements in the availability of affordable, accessible and appropriate financial products and services.”
Walsh also quoted MoneyHub users, who reported uncertainty about whether or not they need specific insurance products - and, if they decide to purchase, they are often unfamiliar with the fine print, terms and conditions as well as the exclusions.
“This can lead to inappropriate insurance being purchased,” Walsh noted. “We believe that there is a growing level of mistrust in the value and purpose of insurance policies sold by banks who continue to aggressively push non-banking products.
“At the most basic level, low-income individuals need to have access to financial products that protect them and aid their financial resilience when it comes to unplanned events,” he added.
