Life insurance is designed to help protect the people you love if the worst was to happen, but a recent study into how we insure ourselves shows that a shocking proportion of Kiwis - around 71% of us - have inadequate levels of life insurance.
The study commissioned by the Financial Services Council (FSC) also shows when it comes to income protection and mortgage repayment, 89% were under-insured and 91% of representative participants had inadequate insurance against critical illnesses. When compared to a similar study also commissioned by the FSC in 2011 by Massey University these results show an alarming increase to levels of inadequate insurance. Massey University found 54% were under-insured compared to 71% today.
While it’s no secret that under-insurance is a major issue for New Zealand, the new study illustrated that Kiwis wrongly perceive having adequate levels of insurance and may face hardship if the worst was to happen. Often selling the house to cover costs or relying heavily on savings isn’t an option. Even if a partner was to work full time, they may not earn enough to support the family.
So what can life insurance cover?
It provides a cash lump sum pay-out to you or your family if you are diagnosed with a terminal illness or pass away. This takes the stress out of trying to cover funeral costs, kids education and mortgage payments while struggling with lost income and debt.
While you can’t always imagine the worst, it is worth planning for it. By taking out an AA Life Cover policy, you won’t be in the majority of underinsured Kiwis who sadly aren’t prepared if something were to happen. You might even be surprised by how affordable it is.
Sources: