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She’ll be right – but will she? Underinsurance in NZ

New Zealanders currently spend 2.8% of GDP on insurance – this is the third lowest in the OECD with the average being 8.4%. With the kiwi attitude "she'll be right" a common occurrence, we take a closer look at why some people do not insure.

Failure to consider the need
Some people face difficulty thinking about the idea of death and disability which can lead to them avoiding the issue or acknowledging a need altogether. Additionally, they can find it hard to accept they may be at risk and feel that it won't happen to them.

Believing the government will provide for them
In NZ we are lucky that our government offers welfare support. However, many people are unaware of the payment limitations should they come into financial difficulty. Often, the level of financial aid offered is low compared to previous household income.

Cost
An ING survey of Australians found that those without insurance tended to over-estimate the cost of premiums, with approximately 30% estimating premiums to be twice actual premiums.

Complex choices
Personal insurance choices can be overwhelming at times with multiple products offered by multiple providers. For this reason, finding a trusted adviser who is willing to conduct a needs analysis is beneficial. On this point, surveys have found that better insurance decisions are made when quality advice is received.

Confusion around ACC
ACC provides a form of disability cover – but only when it is caused by an accident. If ACC is your only form of cover, it is important to realise that it will only provide cover in the event of an accident. It is important to be aware that the chance of becoming disabled as a result of an accident is lower than the chance of becoming disabled due to illness.

If you would like more information on this topic, please contact us.

If you would like to read more of Massey University paper 'Exploring Underinsurance within New Zealand' please
click here.

Image courtesy of David Castillo Dominici /freedigitalphotos.net