The latest research from the Financial Services Council found many consumers do not know how to manage financial risks if they arose.
Seeking the expertise of risk advisers could help them as this lack of know-how in managing risk is despite them being aware of personal risk products available to them, when prompted (see: Kiwis Push Financial Risk Out of Mind…).
Part of the FSC’s report ‘Risking Everything’, looked into how financial risks are actively managed once they are acknowledged.
In the survey, 43 percent of the respondents said “I’m not really sure how I should manage these potential impacts” whereas 25 percent said they did know how to manage them and 28 percent said they were neutral.
43 percent of the respondents said “I’m not really sure how I should manage these potential impacts”
New Zealanders aged 45-54 were most likely to know how to manage the potential impacts and are more likely to have insurance or other risk management in place, although they are also least likely to think about financial risk.
The report stated around half of this age group have a current personal insurance policy in place, indicating the reason that this group are not currently ‘thinking about risk’ as they have the protection in place to mitigate it, so have already thought about it and acted on it in the past.
However, although many in this age bracket have an active policy, overall only 38 percent of respondents indicated they have a current life insurance policy; 14 percent have income protection/mortgage repayment insurance and 11 percent have critical illness insurance.
Furthermore, only 8 percent (of respondents who did not have current policies) had looked into purchasing insurance in the last two years.
“Managing personal risk should be an important consideration for all New Zealanders, and ‘Risking Everything’ is the first of a series of research into how Kiwi’s are thinking about and managing their financial risks,” FSC Chief Executive, Richard Klipin, said in the report.
“Importantly, the life insurance industry will use this research to continue to improve and deliver the best possible outcomes to support New Zealander’s in growing and protecting their wealth.”
The independent survey involved 2,061 New Zealanders.
Click here to view the full report, Risking Everything – Insight Into How New Zealanders Manage Risk.