Nine out of 10 New Zealanders have insurance, according to the Insurance Council of New Zealand. That’s a brilliant rate of coverage, which suggests that Kiwis know the importance of protecting the things that matter to them.
But while the rate of coverage is high, the Insurance Council of New Zealand suggested in 2018 that Kiwis often don’t have the right level of cover. This may be better than not having insurance at all, but it can still leave you vulnerable.
NZ’s huge underinsurance problem
A recent study by Massey University looked into the levels of insurance cover in New Zealand, including analysis of cover for life, trauma, total and permanent disability and income protection. What they found was shocking.
Kiwis often select the wrong form of cover and frequently fail to purchase enough cover for their needs. The numbers speak for themselves:
- 54% of Kiwis have inadequate levels of life insurance.
- 50% of households would suffer a 40% income drop due to underinsurance if the main earner were to pass away.
- Nationally the total level of underinsurance is estimated to be :
- Life insurance: $195.609bn
- Trauma: $58.678bn.
- Permanent disability: $351.827bn.
- Income protection: $2.966bn (per month).
Unfortunately, these aren’t the only types of insurance that Kiwis have underdone. According to a recent NZ Treasury investigation, up to 85% of Kiwis with home insurance are underinsured by a total of 184bn.
Getting the right level of cover
Most people think that having insurance is the main thing, but that’s not quite right. Your insurance policies should all be tailored to your circumstances and your financial situation. Make sure you know how your insurance works, how payouts work, and how to claim it.
For example, your income protection insurance should be able to cover all your expenses for at least 12 months. When it comes to home insurance you should also take great care to correctly calculate the cost of fully rebuilding your home, and consider asking a professional if you’re not sure.
Insurance exists to protect you, your family and your future against the unexpected. If you don’t have the right level of cover, you’re leaving yourself vulnerable and should reassess your policies as soon as possible.
Get in touch with the insurance experts here at Money Empire to get started. We’ll take the time to fully understand what you need from your insurance so that we can ensure you have the best chance of being protected no matter what happens.