Does the best solution to New Zealand’s under-insurance dilemma lie in improving consumers’ financial literacy?
- Yes (76%)
- No (12%)
- Not sure (12%)
The majority of advisers agree that the best way to solve New Zealand’s underinsurance problem is to first address and solve the issue of financial literacy.
This appears to be the message stemming from our latest poll, in which 70 percent of advisers have supported the notion that the best solution to underinsurance is through education. One in five disagree, while the rest remain on the fence.
…the study found ‘…levels of cover do not correspond to actual vulnerability’
Interestingly, a study released by the Financial Services Council in 2013 suggested there wasn’t a huge concern with the take up rate of life insurance ownership in New Zealand. What the study found, however, was strong evidence of high levels of underinsurance to the extent that ‘…levels of cover do not correspond to actual vulnerability.’
The study also raised concerns over the type of cover held by Kiwis, revealing the biggest issue being the low levels of ownership around permanent disability solutions such as TPD cover and long-term income protection cover. (Click here to access the full report, entitled ‘Exploring Underinsurance in New Zealand‘).
It would seem logical that better-informed, better-educated consumers would be more likely to adopt cover that more closely mirrors their personal and business circumstances, and at levels that reflect their ‘actual vulnerability’.
The challenge for advisers and the broader industry, then, is to work in tandem to find a way to raise the level of consumer financial literacy in order to address what remains a considerable underinsurance dilemma for the Kiwi consumer.
We’d welcome your own take on this question, as our poll remains open for another week…