The current edition of Money & You report from the Financial Services Council (FSC) of New Zealand has revealed that the cost-of-living crisis is impacting New Zealanders choice to protect their health and life through insurance.
FSC CEO Kirk Hope said, “New Zealand continues to grapple with an underinsurance challenge, with 41% of respondents to a survey saying they hold life insurance and 39% health insurance.”
The 36-page research report Money & You: Managing Risk Through Challenging Times, highlighted that a significant knowledge gap persists among New Zealanders around financial risk management.
Mr Hope said, “Despite this low uptake, over 90% of those that have life and health insurance believe their policies offer good value for money."
The findings of the survey include:
Nearly half (45%) admit to a poor understanding of the relationship between risk and return, while many remain unprepared for the financial impact of losing the household’s primary income.
While over 70% of New Zealanders understand the limitations of insurance, such as the effect of age and illness on premiums and cover, they highlight peace of mind and concerns about potential financial consequences as the leading motivations for taking out policies.
Most life and health insurance are funded personally by individuals, with the smaller remainder either fully or partially subsidised by employers.
Mr Hope said, “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.”
“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.”
“FSC's policy positions aim to deliver meaningful outcomes, enabling more New Zealanders to experience the financial security and peace of mind that life and health insurance provide. This, in turn, will grow greater financial confidence and improve overall wellbeing." Said Mr Hope.