Survey highlights need for life insurance
Three quarters of New Zealanders are trapped in a vicious cycle of debt and underinsurance leaving their families exposed to the risks of financial hardship if a wage-earner dies or is too ill to work, according to an internet poll carried out on behalf of American International Assurance New Zealand (AIA).
Sunday, December 4th 2005, 10:08PM
The survey shows that 40% of Kiwis would not be able to cope for more than three months if anything happened to their ability to earn a living.
The AIA research shows that almost half of all New Zealanders have absolutely no cover on their lives or their health and only a quarter are confident that their level of cover would be sufficient to look after their family in the event of death or serious illness.
"We know from actuarial studies that around 880 people with dependent children will die in New Zealand each year," AIA chief executive Nick Scarlett says. "Our new research found that three quarters of Kiwis worry that their families would be exposed to financial hardship because of inadequate insurance; they claim they cannot afford to pay the premiums even though their unearned expenditure funded through borrowings has risen by 16% over the past year to an historic high."
"The average family has $125,000 of borrowings in mortgages, personal loans and credit cards and many of them have no idea how they will be able to pay that off if anything untoward happens."
The research found that of those that do have insurance just over 37% have basic life insurance, 33% have medical insurance, and 13% have income protection insurance, while only 9% have critical illness cover.
In the short term just over half of those surveyed thought they would be able to muddle through in the event of illness or loss by drawing on savings and investments, borrowing from family members, selling assets or property and borrowing from friends.
But 20% of respondents believed they would not be able to manage for a month on their own resources; a similar number would be able to manage for between one and three months, with slightly less feeling they could manage for up to six months.
Significantly, less than a quarter felt they could manage for a year or more.
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