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Are Kiwis underinsured?

Posted on 7 January 2014

It is hard to put a dollar value on the sense of security you will have knowing the people you care about are always going to be looked after.

As Kiwis, we don’t always see the relevance of life insurance. We live our lives day to day and don’t always plan for the future- many of us have that ‘She’ll be right’ attitude. But what if you were struck by an illness that left you unable to work for months? Or, worst case scenario, what if your family was left behind? Would they be able to live comfortably after you were gone?

A survey commissioned by the Financial Services Council (FSC) in 2011 found that out of 2000 New Zealand house holds, 90 % of respondents have general house, contents or car insurance. However, only 56 % held a life insurance policy and under 21 % had income-protection insurance.

It is often easier to purchase insurance for items we can quantify in a dollar value. For example, we know the general cost of fixing a car if it were to be damaged in an accident, and we have a general understanding of the cost of our home contents. This is often not the case with life insurance, as it is hard to put a dollar value on the sense of security you will have knowing the people you care about are always going to be looked after.

The FSC survey results also showed, if an accident or severe illness meant the primary income earner was unable to work, only 20 percent of respondent households could cope for more than 1 year paying their household expenses and continuing their current lifestyle. Many respondents also found assessing personal risk challenging and often complicated.

Life insurance doesn’t have to be a challenge. AA Life is a highly trusted brand in New Zealand and we are constantly working on simplifying life insurance and making it easier to understand for our customers. There are tools on our website to help you work out how much life insurance cover you may need depending on your circumstances. Even if you have an existing policy, you may want to revisit your current cover as your circumstances in life change. Life changes such as a change in income, buying a home, starting a family or even adding another child to the family can mean your current policy is not the best fit anymore. Talk to us and make sure you’re covered, because in the end it’s about looking after those close to you.

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