Having backup money for an emergency, insurance and a will should be top of mind among Kiwis, the Commission for Financial Capability (CFFC) says.
The annual Sorted Money Week kicks off today, centred around the financial impact of not being prepared to ‘weather life’s storms’.
“To be really resilient as a population, we need to know that we can weather the big financial hits of an unexpected event,” says the head of the CFFC, Retirement Commissioner Diane Maxwell.
Research by the CFFC shows only half of the 2,000 people surveyed could count on insurance to cover property loss due to theft, serious damage to their home through disaster or weather, or car crash or major breakdown.
Income protection was one of the least favoured forms of insurance, with only 15 per cent of Kiwis taking it out, despite 42 per cent saying their income varied ‘a bit’ or ‘a lot’.
Maxwell says the Kiwi “she’ll be right” attitude could have something to do with New Zealanders’ unenthusiastic attitude toward insurance. Another could be cultural expectations that family and community would help in times of hardship.
“We don’t advocate everyone having every form of insurance – some costs you can absorb and your needs change over time – but insurance is there to make sure you don’t incur a big, unexpected bill you can’t pay. The risk is people are thrown into debt.”
Another area of concern for the CFFC was that only 59 per cent of Kiwis aged 18-34 had car insurance, possibly because the cost for under-25s is so high.
Kiwis also tend to under-insure their homes, the CFFC says. A 2016 Treasury report estimated 85 per cent of our houses were under-insured by an average of 28 per cent, where the insurance policy would not pay out enough to rebuild a home fully.
“When something bad happens, you want to be looking after your people and your wellbeing, not stressing about how much money you’re going to need to repair the damage,” says Maxwell.
“Let the insurers do the heavy lifting financially, while you look after the rest.”
Find out more about Money Week here.
First published September 3, 2018
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