New Zealanders are being implored to heed the lessons of recent research showing many Kiwis continue to be under-insured.
The research, from the Financial Services Council of New Zealand (FSC), has forced a re-think over the risks people face around health, jobs and life in general according to Kerry Vaughan, marketing manager of Kiwi insurer Pinnacle Life.
"We know people are feeling the pinch this year and the purse strings have tightened up," she says. "But if it has taught us anything, it is that unplanned things can, and do, happen; it's forced a lot of people to think about what's important to them."
Her plea has come as FSC research shows that while 80 per cent of Kiwis know about life insurance only 38 per cent hold a policy. And of those who do, just 29 per cent are considered to have the right amount of cover.
Vaughan believes beside financial constraints, one of the reasons people are reluctant to consider paying life or income insurance premiums is because no-one likes to think about the worst happening to them.
Although in the week leading up to the Level 4 lockdown the company noticed a surge in inquiries about life insurance as people confronted the reality of a particularly noxious virus, she says interest (in insurance) again waned as New Zealand successfully managed the impact of the pandemic.
"But (this success) hasn't reduced the need to consider life and/or income insurance," she says. "Of course no-one wants to think about losing a job or going before their time, but at some point all of us are definitely going to die."
She says when economic times are tough people look to reduce their costs and life insurance can be a target for this: "It's also, I think, because people don't see immediate benefits; it's not like Netflix where you get instant gratification by watching a movie."
Her views are reinforced by the FSC studies. One, Gambling on Life, found a high number under-insure not just their lives, but income and critical illness as well. It estimated just nine per cent of Kiwis are sufficiently insured for major illness and only 11 per cent have adequate income cover – this despite claim payments rising from $1.15b in 2017 to $1.5b in 2019.
Another FSC survey, Money and You released in June, painted a grim picture around job loss. It showed up to 70 per cent of Kiwis facing such a scenario would not be able to meet basic financial commitments (mortgage, rent, bills) beyond a short period of time. Alarmingly over a third would not last more than a month.
"It is a known fact that many New Zealanders are under-insured when it comes to their lives, but if you are someone who has a mortgage and young children then you certainly need good cover," says Vaughan.
She urges people not to wait for the typical "trigger" points to occur: "Most only think of their mortality at certain times in their lives – when they have a baby, when they buy a house or they attend a funeral of a friend about the same age or someone who has died too young.
"But when thinking about insuring your life and income, people need to think about not only where they are today, but also where they might be in the future and what their family might need," she says.
She encourages regular reviews of insurance cover to take account of life's changing circumstances: "Consider how you would meet costs if you lost your job or became seriously ill? Do you still have kids at home, what is your debt level?
"There may also be circumstances where you can reduce premiums or cancel life policies altogether," she says. "It may be your children have grown up and got their own jobs, or you've paid off the mortgage."
She says although Pinnacle is a relatively small player in the New Zealand market, it claims to have been the first in New Zealand to enable customers to buy policies direct rather than going through a broker when it was established in 1998.
Today people can set up a policy in a short time by going online and the company provides links to help determine what type of policy and level of cover best suits individual circumstances (https://www.pinnaclelife.co.nz/help-me-choose/tools-and-calculators and https://www.pinnaclelife.co.nz/help-me-choose/what-cover-might-i-need)
Vaughan says customers are welcome to phone to discuss options: "Right now is a great time to be reevaluating your life insurance options and protecting what makes you lucky."
Pinnacle has two offers available: (1) 10 per cent off your premiums for the first year if you take out a new policy online and (2) save 20 per cent on your premiums if you switch an existing policy to Pinnacle Life (providing your health is still the same)
For more information go to: www.pinnaclelife.co.nz