Your ability to earn an income is your greatest asset. On an income of $50,000, your lifetime earnings could easily exceed $2m while your major assets (house, contents and car) may only be worth a quarter of that. And, of course, you can’t maintain your lifestyle if you lose your income for any reason.
While 98% of home owners and 95% of car owners are insured1
, four in five New Zealanders have not insured their income against sickness or disability2
You and your dependents rely on your income to meet day-to-day living expenses, their lifestyle expectations and to meet the major expenses (such as mortgage repayments) that are part of your standard of living.
If you are unable to work, you may also have to pay for the things you now do for your family. You may also have greater day-to-day expenses because of any special help with a disability or illness. Many think that government benefits such as ACC will be their salvation but these have severe limitations and should not be relied on to plug the gap.
If you suffer an accidental injury that stops you working or means that you can only work in a lower paying job, ACC will pay medical and rehabilitation costs as well as up to 80% of pre-injury income.
However ACC does not pay benefits if you cannot work because of illness or death from disease or degenerative conditions that weren’t caused by your work. There are also government benefits but these are not related to your earnings (e.g. the current sickness benefit rate is $229.01 a week for a single adult and $381.68 for a couple – both taxable).
Some quick numbers on personal risks:
1 in 8 30-year old men die before age 65 and 1 in 12 30-year old woman die before that age3
Almost 1 in 5 30-year old men and more than 1 in 10 30year old women will suffer a critical illness before age 654
In 2011, 58,650 New Zealanders were living on a sickness benefit5
141,500 New Zealanders between the ages of 15 and 44, and 285,500 between the ages of 45 and 64, report having a disability from a long-term condition or health problem lasting, or expected to last, six months or more6
The average period of claim for illness under New Zealand disability income insurance policies is 492 days7
8,779 cases of cancer were registered in 2009 for people aged between ages 25 and 658
3.3% of men and 1.9% of women between ages 55 and 64 had been diagnosed with a stroke during their lifetime9
10.3% of men and 6.0% of women between ages 55 and 64 had been diagnosed with angina or had a heart attack that resulted in hospitalisation during their lifetime10
1 Insurance Council of NZ Survey September 2006
2 FSC Underinsurance Project 2011
3 NZ Life Tables 2005-07, Statistics New Zealand
4 Gen Re, New Zealand Critical Illness Survey, 2010
5 Ministry of Social Development 2011
6 2006 Disability Survey, Statistics New Zealand
7 GenRe (2009) New Zealand Disability Claims Survey
8 2009 cancer registrations, Ministry of Health
9 2006/07 New Zealand Health Survey
10 2006/07 New Zealand Health Survey