New research commissioned by the Financial Services Council (FSC) has revealed that a lot of Kiwis are underinsuring their lives despite being aware of the importance of life insurance.
“Gambling on Life,” the third and final part in the FSC’s research series on Kiwis’ attitudes to financial risk, aims to understand the reasons behind underinsurance and the potential risks that some Kiwis expose themselves to. It focused on life insurance, income protection/mortgage repayment insurance, and critical illness insurance.
“Gambling on Life found that while many New Zealanders are aware of the importance of these types of life insurance, this isn’t reflected in adequate levels of cover for themselves,” Richard Klipin, chief executive officer of the FSC, said. “While 54% of those surveyed agree that it is important to have the right amount of insurance to cover risks including illness, death and job loss; estimates of underinsurance are much higher.”
Critical illness showed the highest level of underinsurance with around 9% of Kiwis being sufficiently insured, followed by income protection/mortgage repayment insurance with 11% and life insurance with 29%.
“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,” Klipin said. “For others, the research highlights some of the reasons for underinsurance, which includes affordability, priority, trust, self-insurance and complexity.”
