Financial Services Council: Unexpected sickness could destroy families.

In a recent report, the Financial Services Council of New Zealand said Kiwis were under-insured for loss of income from sickness. 

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.

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Study: New Zealanders heavily under insured.

 "A two-year Massey University study has shown New Zealanders are under-insured by $650 billion.

Lives were under-insured by $195.609 billion, permanent disability protection was lacking by $351.827 billion and income protection was under insured by $2.966 billion per month.

About 2000 respondents filled out an online survey that asked questions about their insurance cover, perceived needs and their reasons for not having more insurance.The research found most New Zealand families had high levels of vulnerability to medium or long-term disability as a result of underinsurance. 

FSC chief executive Peter Neilson said the research highlighted serious financial risks
More than half the respondents said they were suspicious of insurance companies and 43% found insurance jargon difficult. About 60% thought finding personal risk insurance was too hard.

Particularly among younger respondents, there was a view that it was too difficult to know what level of insurance was needed.

Others thought Government assistance would cover them in the event of an accident or illness that kept them off work.

But almost half said having the right level of cover was important to them."

- Taken from an article by Susan Edmunds (Original Article Here)

This article made the news quite a bit last week, and for good reason. The numbers themselves ($650 billion in total! That is nine times the entire national debt as of 25/2/2013!) reflect a profound disconnect between New Zealanders and their insurance needs. The survey itself shows that a lack of knowledge and the demands of finding insurance is a critical factor in so many New Zealanders being under insured.

We are glad this issue is getting some national exposure, because it highlights what we have been seeing internally for some time; that when things go wrong, the real financial needs of people are not managed due to inadequate cover and they find themselves in dire straits that could have been avoided.

Our business specialises in taking the difficulty out of securing insurance that actually meets your real life needs and doesn't leave you under insured or bearing unreasonable costs. If you are one of those 60% who are finding insurance difficult to attain, we have the experience to take the stress out of your hands and make sure you are not one of these unfortunate statistics, and that you have financial peace of mind if tragedy strikes.

Make an enquiry about your insurance needs today.

Visit our website for more information.