With the current cost of living crisis draining more money out of bank accounts, the last thing on your mind might be insurance.
But the industry is warning the consequences of not having insurance could create a heavy burden on whānau after alarming statistics reveal the majority of Kiwis are underinsured.
The Financial Services Council NZ (FSC) survey of over 2000 Kiwis found around 70 percent of New Zealanders are underinsured, putting their families at risk.
Only 11 percent of respondents reported having income protection insurance, 14 percent have total and permanent disability insurance, and 18 percent have cover for trauma or critical illness.
While respondents reported greater uptake of life insurance (38 percent) and health insurance (32 percent), an overwhelming percentage of the population is not covered should the worst happen.
In November, mortgage advisor Graham Goodisson told Newshub many homeowners are cancelling things such as life and health insurance to grapple with their rising mortgage rates.
Almost seven in 10 Kiwis do not have health insurance, meaning they are relying on an overwhelmed public health system with increasing wait times.
"With the current cost of living crisis, an overwhelmed health system, and last week's OCR increase, many Kiwis are struggling," FSC CEO Richard Klipin said in a statement.
"Many haven't lived through a recession or severe financial shock before and will be looking for support as they face these challenges for the first time."
"While it's understandable some are, and should be, prioritising immediate needs, the latest findings are cause for alarm and reflect the importance of long-term thinking when it comes to our finances."
Other research by the FSC reveals that two in five people would be unable to access $5000 if something unexpected were to happen.
"We need to consider what would happen if you suddenly got sick or had an accident and were unable to earn a living. If you don't have access to emergency funds and don't have insurance, who else will be impacted and is relying on you to get by?" Klipin said.
"Being adequately insured is not so much about us as individuals, it's actually about protecting the ones we love. Looking at it in this context, insurance is something you really can't afford not to have."
CEO of Trustees Executors, the FSC's research sponsor, Ryan Bessemer said the consequences of not having insurance can create a heavy burden on whānau should the worst happen.
"There's a balance to get right, and Kiwi families deserve to both be able to protect themselves and their families while also being able to get by," Bessemer said.
The FSC suggests consumers talk to a financial adviser about their options and consider alternatives to cancellation.
"We're not saying that everyone should drop everything now and max out their insurance policies," Klipin said.
"What we are saying is to sit down, have a conversation with your household, and figure out how you might balance paying the mortgage and bills while looking after your family and your health."
