Life insurance is seen by consumers as a more black and white process and easier to make a claim, compared with critical illness and income protection insurance.
This is according to the latest research commissioned by the Financial Services Council, ‘Moments of Truth, – Key Insights into the New Zealand Life Insurance Industry’.
The report found consumers appreciated that income protection and critical illness cover provided certainty and an income to make life more comfortable, however they were perceived as more expensive with a harder and more subjective claims process.
For both critical illness and income protection insurance some participants had negative experiences and felt vulnerable at some point of the claim process. However, those with a broker relationship felt more supported.
“Mine was my husband’s income protection and it was really easy. We rang the broker and she just did it all, which was great,” said one Auckland claimant.
On areas for improvement, respondents suggested ensuring that all documentation was at hand and that decision making was faster.
Respondents in the focus groups during the research, indicated that when it came to critical illness, ACC’s cover was a consideration and income protection was seen as important to those with an insecure job.
“I saw it more as the chances of having an accident was far higher and you are covered by ACC. So the critical illness thing was far more unlikely to happen. I felt the premiums I am not paying over the years is going to pay for it,” said another Auckland claimant.
Those who currently had one or more of the three types of life insurance were asked when they first purchased their current policies.
The research also found that life insurance policies were more likely to be long-standing with 42 percent of these policies purchased eleven or more years ago, versus 30 percent of critical illness insurance policies and 22 percent of income protection policies.
Click here to view the full Moments of Truth report.