Financial Services Council chief executive Peter Neilson said a two-year research project by the FSC showed just 15% of households had income protection insurance.
All were covered for the possibility of an accident by ACC, but they were more than twice as likely to suffer a serious illness.
Neilson said: “Each year 15,000 primary income earners fall seriously ill and are unable to work for six months or more. For a person on the M tax rate, the sickness benefit is $341.60 a week and this is means tested. If another person from the household is earning income, many families find they are too rich to get a household income tested sickness benefit, but too poor to pay the rent, mortgage or food bills.”
He said most Kiwi families would not be able to pay their mortgage or rent four weeks after using up their annual or sick leave.
For someone on the M tax rate, the sickness benefit is $341,60 a week, means tested.
Neilson said: “If another person from the household is earning income, many families find they are too rich to get a household income tested sickness benefit, but too poor to pay the rent, mortgage or food bills.
Taken from Good Returns article: 'Sickness could destroy families'
Comments: This article is definitely representative of our experience in speaking with members of the public and our own friends and families. It is definitely worth stating that simply put, out of the 85% who have no form of income protection, some simply cannot afford it. However, a good proportion can, and it is worrying that some Kiwis adopt a laissez faire attitude to the possibility of sickness and disablement. We have seen and dealt with many of those 15,000 primary income earners per year that fall seriously ill (including Justin, whose story can be found here). The majority of cases have wished that they had some form of protection in place when the disastrous circumstances of being unable to support a family and a way of life struck.
As Kiwis we can be very tough, self reliant, can do people, but often this can give rise to the mistaken feeling of invincibility, which the statistics show is simply unwarranted. Obviously there needs to be a middle ground between spending too much of the money you don't have on income protection and not having any at all and facing disaster in the event of severe illness. However, the statistics from other western nations dwarf our percentage of 15% (for instance, 27% of American workers have income protection), suggesting the "she'll be right" attitude of New Zealanders may be getting in the way.
Securing insurance doesn't have to be a chore, or exceedingly expensive. Talk to our team of advisers and let them go to work for you. There is a great chance we can keep your costs down and make income protection cost effective and manageable, so that you don't have to face the trauma of facing illness and disablement without proper cover.