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Research Results

How Kiwis gamble with life through under insurance

27 Jan 20

Credit: FSC
How Kiwis gamble with life through under insurance
Big gap between insurances needed and those Kiwis have...

New research commissioned by the Financial Services Council (FSC) has revealed the high number of New Zealanders that are underinsured when it comes to their lives, incomes or suffering a major illness.

The third and final part in the FSC’s research series on New Zealanders’ attitudes to financial risk; ‘Gambling on Life’ focuses on the life insurance gap to understand the reasons behind underinsurance and the potential risks that some kiwis expose themselves to.

The study, conducted by Horizon Research, looked at the three main types of life insurance available in New Zealand; life insurance, income protection/mortgage repayment insurance and critical illness insurance.

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.

Citical illness:

Critical illness showed the highest level of underinsurance with only an estimated 9% of Kiwi’s being sufficiently insured, followed by 11% who had adequate income protection/mortgage repayment insurance and 29% with adequate life insurance.

Perceived adequacy of cover:

For policy holders, the perceived adequacy of cover is relatively positive, with similar assessments for all three policy types (life, income protection and critical illness insurance).

The highest rating was for critical illness insurance (79% very adequate and adequate) followed by income protection insurance (77% very adequate and adequate) while life insurance was in third place (76% very adequate and adequate). However, for all three types of insurance, just over two out of ten policy holders responded that they felt inadequately covered.

Attitudes to potentially being underinsured:

Just under a third (30%) of policyholders worry that the amount of cover they have is not enough while 44% believe they should have more insurance but can’t afford to get it.

The full Gambling of Life report is available here.