Life cover “key” to closing New Zealand’s protection gap

November 1, 2021

Latest research from the Swiss Re Institute has revealed some important insights into New Zealand’s underinsurance, and what can be done to close the protection gap.

So, here are some key things to know.

The life insurance gap

According to the report, if the breadwinner passed away unexpectedly, most New Zealand households would be vulnerable to financial hardship.

Swiss Re estimated that there’s a $670 billion gap (or $830,000 per household) between the household’s financial resources and how much life insurance they would need to maintain their standard of living, should anything happen to the family’s breadwinner.

What’s more, this protection gap is growing fast. To help close it, according to Swiss Re, it’s crucial that Kiwis take out an appropriate level of life cover, to protect their families’ future.

Closing the gap with more life insurance

It’s interesting to note that more than 80 per cent of the respondents understood that losing the family’s breadwinner would affect their finances significantly.

However, only 39 per cent of Kiwis surveyed had life cover in place, and less than 36 per cent of households had enough assets to protect them financially if they lost their primary earner. Out of the remaining pool of Kiwis, over 64 per cent faced a ‘protection gap’ to a certain extent, with about 20 per cent of this group having only 10 per cent or less of the financial resources they required to protect their financial needs.

Another key finding was that the “challenge was most acute among young and middle-aged professionals”, which represented nearly half of the population, but 80 per cent of the total protection gap.

How much do Kiwis value life cover?

The survey found that New Zealanders were “mindful of mortality risks and aware of the need to prepare financially for the premature death of the primary earner.” While they understood the importance of life insurance, in general, people were often more concerned about their health rather than mortality risks.

As the research highlighted, there’s value in careful planning and appropriate financial cover. Remember, life insurance is designed to protect your family’s financial future should the unthinkable happen, providing your loved ones with invaluable support.

Like to discuss your cover needs?

Get in touch – as insurance advisers, it’s what we’re here for. We can help you plan for the unexpected, with an appropriate level of cover in place to protect your financial needs.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.