New Zealanders are under-insured by about $650 million and face serious financial risk in the event an income earner dies or suffers serious illness.
The findings are part of a two-year research project commissioned by the Financial Services Council (FSC) and undertaken by Massey University which examined levels of cover for permanent disability, income protection, trauma and life cover.
According to modeling conducted as part of the research the levels of under-insurance are $195.609bn for life, $58.678bn for trauma, $351.827bn for Permanent disability and $2.966bn per month for income protection.
The FSC commissioned research asked 2000 respondents to complete an online survey reporting their current insurance, perceived insurance needs and reasons for not having insurance.
FSC chief executive Peter Neilson says the research paints a picture of serious financial risk for New Zealanders and their families should an income earner die or suffer a serious illness like cancer, heart attack, or stroke.
The perception that insurance premiums were unaffordable was reported as the major barrier to taking out insurance, with 36 per cent of respondents indicating they were prevented from having adequate cover in some way.
The research also underlined the importance of assessing levels of insurance cover, concluding that of the 56 per cent with life insurance more than half had inadequate life insurance cover (less than 80 per cent of ideal life insurance) and more than 40 per cent were severely under-insured (less than 60 per cent of ideal life insurance).
While the vast majority (90 per cent) of respondents had some form of general insurance (for example, car, house or contents) only 56 per cent had life insurance and even fewer (21 per cent) had income protection or disability insurance.