If someone asked you right now to name your biggest asset, what would it be? Your house? Your car? Maybe even your KiwiSaver account?
Those are certainly important items, but if you think about it, they all depend on one thing: your ability to earn an income. So, that’s your most important asset. The question is…
What are you doing to protect it?
Most of us have car or property insurance in place. After all, we don’t want to be left paying the bill if we crash our car into a top-of-the-line Mercedes, or if a disaster strikes at home and wipes out all our stuff.
But while we’re pretty good at covering our things, New Zealanders aren’t very good at protecting our most important asset – ourselves and our incomes.
Recent research from the Financial Services Council, which represents most of this country’s personal insurers, found that the majority of New Zealanders were leaving themselves exposed.
While people could identify financial risks, such as being out of work, the impact of the death of a loved one or a natural disaster, a third didn’t think about how those risks would apply to them. More than 40 per cent said that, if the thoughts did cross their minds, they then forgot about them.
Only 20 per cent of the people surveyed had considered, in the past two years, the risk of lost income due to illness or injury. But two-thirds thought that there was a moderate to high chance they would strike major financial problems if they were off work because of those reasons, and only 38 per cent had an insurance policy that would help.
As a nation, we’re underinsured – but you don’t have to be
As a nation, we’re significantly underinsured. New Zealand spends about 3 per cent of its gross domestic product on insurance compared to an OECD average of 8.4 per cent. And even that 8 per cent figure might not be high enough.
The FSC research showed there were a number of key reasons why people weren’t taking out insurance – some people thought they couldn’t afford it, others said it was too complicated. Some said they would rely on ACC or government support – perhaps not realising that this is not available for cases where someone is off work due to sickness.
The basic supported living payment is only $273.70 a week for a single person and if you have a partner who is working, it’s likely that you wouldn’t qualify for anything at all if you couldn’t work due to illness.
The bottom line?
With good advice, insurance can become a key component of your financial wellbeing – today and in the future. Talk to us about how to protect yourself. It doesn’t have to be complicated and there are ways to tailor your insurance to your needs and budget.
Talk to us about how to protect yourself. It doesn’t have to be complicated and there are ways to tailor your insurance to fit your budget.
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 advice from a financial adviser.