Cost and lack of understanding barriers to taking out insurance cover
A general lack of understanding of risk versus return combined with affordability worries remain the key factors keeping New Zealanders underinsured.
Tuesday, November 26th 2024, 5:47PM
The Financial Services Council’s latest Money & You research confirmed underinsurance was still an issue in New Zealand, with only 41% saying they hold life insurance and 39% health insurance. A quarter of respondents had taken out insurance to cover trauma or critical illness, income protection or total and permanent disability.
“Despite this low uptake, over 90% of those that have life and health insurance believe their policies offer good value for money," said FSC chief executive Kirk Hope.
There was a higher level of awareness around the limitations of insurance, with 70% of respondents understanding the effects of age and illness on premiums and cover. Nearly half of all respondents admitted to a poor understanding of the risk-return relationship which was likely a contributing factor to the low numbers, said Kirk Hope. The cost of insurance policies was also a barrier.
“Despite green shoots in the economy, the cost-of-living crisis is still affecting decisions around life and health insurance, with affordability proving to be a barrier for many,” said Kirk Hope.
“The findings highlight an urgent need for greater financial education around risk management, alongside efforts to remove barriers that prevent employers from offering insurance as part of employee remuneration packages.”
Health and life insurance by the numbers
The FSC’s data shows more than 4.14 million people in New Zealand were covered with life insurance products, while 1.52 million people had health insurance for the year to the end of September.
Current life insurance premiums total more than $3.2 billion while health premiums total $2.96 billion. More than $1.27 billion in life insurance claims were paid during the period, while $2.5 billion in health insurance claims were paid out.
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