Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Kiwis insure cars before incomes

Kiwis insure cars before incomes

More than 1,000 families a week (54,800 a year) experience a sickness that prevents a main income earner from working for three months or more.

Financial Services Council (FSC) funded polling on the impact of long term illness on incomes shows around half (47%) of employed 18-64 year olds can’t survive for more than a month after using up their sickness and annual leave.

An average family needs $683 per week to make up for a main income earner in the household not being able to earn because of sickness. For a family with dependent children the maximum Job Seeker Allowance (previously the sickness benefit) is $340 a week.

The survey found most people (51% of 18-64 year olds) did not know a partner’s income of $30,000 or more would preclude them receiving all or part of the Job Seeker Allowance. One in five New Zealanders wrongly thought ACC covered all long term sickness not just those related to long term work place exposures.

The FSC has sponsored the Mind the Gap seminar being held today in Auckland, to help inform New Zealanders of their financial vulnerability in the event of long term illness preventing employment and what can be done about it.

In 2010 the FSC commissioned Massey University to identify the under insurance gap in New Zealand. They concluded income protection insurance was the personal insurance product most people needed but were least likely to hold. The industry responded by introducing simpler products and better explanations of the benefits. Coverage of income protection has gone up from about 20% to now 26% of households in this latest survey said FSC CEO Peter Neilson.

By comparison, around 80% of households have a vehicle insured, 70% have home and contents coverage and 60% have their homes insured.

Part of the explanation comes from many people not realising their lifetime income is their most important asset. An income of $50,000 a year over 40 years comes to $2 million, much more than the value of most homes. Unprompted, when asked what their most valuable asset is, most (45%) of Kiwis (18-64) say it is their home.

Kiwis also typically underestimate their likelihood of being off work for a long period caused by sickness. Most New Zealanders (60%) think they have about the same or greater likelihood of being off work long term following an accident rather than following sickness. In fact for the population as a whole you are 2.2 times more likely to be off work for six months or more from sickness compared with an accident. For the 18-64 year olds it is 1.8 times more likely.

“The new polling is a bit of a wake-up call and helps partly explain the relatively low take up of income protection insurance by only 26% of households,” said Mr Neilson “These key facts will be distributed to people who work alongside those living with long term illness. Health workers, social workers and budget advisers will be able to give good advice based on this evidence.

“We hope they will also start a conversation at the Mind the Gap seminar and in the wider community about how we can protect the financial security of families when a main earner has a long term illness that prevents employment.”

Some families will cope by using social security benefits, ACC, previous savings or by selling assets. For others, income protection insurance that maintains most of your income following sickness will be needed said Peter Neilson.

Over the last five years only one in eight of the households struck with long term illness had income protection insurance in place when it happened. The income gap following sickness needs filling and income protection insurance is one of the means of doing so concluded Mr Neilson.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Fuels Rushing In: Govt "Ready To Act" On Petrol Market Report

The Government will now take the Commerce Commission’s recommendations to Cabinet...
• A more transparent wholesale pricing regime • Greater contractual freedoms and fairer terms • Introducing an enforceable industry code of conduct • Improve transparency of premium grade fuel pricing... More>>


Reserve Bank Capital Review Decision: Increased Bank Capital Requirements

Governor Adrian Orr said the decisions to increase capital requirements are about making the banking system safer for all New Zealanders, and will ensure bank owners have a meaningful stake in their businesses. More>>


Aerospace: Christchurch Plan To Be NZ's Testbed

Christchurch aims to be at the centre of New Zealand’s burgeoning aerospace sector by 2025, according to the city’s aerospace strategic plan. More>>


EPA: Spill Sees Abatement Notice Served For Tamarind Taranaki

The notice was issued after a “sheen” on the sea surface was reported to regulators on Thursday 21 November, approximately 400 metres from the FPSO Umuroa. A survey commissioned by Tamarind has subsequently detected damage to the flowline connecting the Umuroa to the Tui 2H well. More>>

Taskforce Report: Changes Recommended For Winter Grazing

A Taskforce has made 11 recommendations to improve animal welfare in intensive winter grazing farm systems, the Minister of Agriculture Damien O’Connor confirmed today. More>>