More than half the people who took part in an FSC survey on life insurance say it is too expensive, with others saying they are too fit and healthy to need it. Distrust of the insurance industry was also a reason given for not buying cover.
The FSC’s Money & You – The Perceptions Gap report states 22% of consumers are over-confident when making financial decisions, and that better financial literacy does not necessarily lead to more financial confidence.
Among the answers given by those taking part in the survey on life cover included a 24-year-old who said they had never thought about insurance, another said they weren’t sure of the benefit or how insurance worked, while a 30-year-old couldn’t figure out the best policy to buy.
The FSC states that New Zealanders are “significantly underinsured”. The OECD says just 22% of Kiwis have life insurance, leaving 78% without cover. In Australia the figure is 35%.
Reasons given by FSC survey respondents for not having life insurance include:
- Insurance is too expensive: 63%
- I am healthy, so I don’t see the need for it: 16%
- I don’t see the value in insurance: 14%
- I don’t trust insurance companies: 14%
- Insurance is a waste of money: 10%
- My family circumstances mean that I don’t need insurance: 9%
- Insurance is for people that are older than me: 5%
The report also states that 20% of New Zealanders have not insured their income against sickness or disability.
Respondents said they would take out an insurance policy to cover income:
- If I had more money: 57%
- If my health started declining: 26%
- If I started a family: 18%
- If it was more simple to understand and apply: 16%
- If any insurance company could better explain the benefits to me: 15%
“Together, government, regulators and the financial services industry have both a responsibility and an opportunity to address these priorities and support New Zealanders,” says the FSC.