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Watch that Insurance Gap

Research shows women seem more likely to underestimate their financial worth and are more heavily represented in the under-insured category.

17 April 2023

Being a woman isn’t always easy, they’ve had to fight for a lot of their rights over the years, like the right to vote and reduction of the gender pay gap.

But gender pay isn’t the only gap that affects women; they’re also affected by the under-insurance gap. In 2020, Financial Services Council (FSC) research showed that a whopping 91 per cent of New Zealanders either don’t have, or have insufficient critical illness insurance (think cover for things like strokes and heart attacks), followed closely by 89 per cent of Kiwis who have limited to no cover for protecting their income.

While these statistics include men and women, research by the FSC shows women seem more likely to underestimate their financial worth and are more heavily represented in the under-insured category.

Most Kiwis are under the impression they are in a better financial position than they actually are. As a general rule we are not overly worried about our financial security. But, if you were to specifically ask someone on the street if they could comfortably live off their savings for more than a month without an income, the answer would almost certainly be “no”.

Valuable contributions

Not every Kiwi is under this impression. In December 2021 the FSC reported on women and their financial wellbeing and found 60 per cent worry about their finances to the point that it can influence their everyday life.

Traditional gender roles have changed a lot over the years; long gone are the days when a woman’s sole purpose was to stay home and have babies. According to Statistics New Zealand women make up 47 per cent of our workforce. Women are out there making valuable contributions to their communities and society, so why are they not helping to safeguard themselves?

There are many reasons women may not have adequate insurance. Maybe they aren’t the main “breadwinner” of the family and therefore don’t see protecting their own financial contributions as being as important; there could be a lack of knowledge around why it’s important to have it in place, or when thinking of insurance, the subject of mortality can be daunting and perhaps even confronting.

While all these reasons can be valid, they aren’t a good reason to at least understand the financial risks you and your family might face and how you might mitigate them. We invite you to look at the below scenarios to see if they apply to you.

Scenario one: You’re a stay-at-home mum, your family relies on you to keep doing the things that make you a great mum and keep the house in order (because let’s face it, you run this house). What happens if you become incapacitated and no longer able do these things? Do you have enough resources to help look after your family and run the house while you recover? Would your family incur additional costs for childcare? Would your partner need to change their working situation to accommodate this temporary change in lifestyle?

Scenario two: You’re a woman who may or may not be in a long-term relationship and living life to the full on your single income. Are you prepared to cover any unexpected costs that may arise should you need to take time off work for medical reasons? “Oh, but I have a partner” I hear some of you say. Does your partner have enough excess income to cover any medical costs that may occur on top of all the normal costs of living? And even if you do have insurance, how long has it been since you reviewed your cover? Do you have adequate coverage for your current financial situation?

Having personal risk insurance is an investment in yourself to help protect you and create a safety net from financial hardship should unthinkable situations arise. So, while you may not necessarily be the primary breadwinner in your family or may not have any dependents, it doesn’t mean you aren’t worth insuring. Having a policy in place means you can help maintain the standard of living you’re used to and help create a buffer for unexpected bumps in the road.

Listen to the experts

We know this subject can be daunting and difficult to approach or to even know where to start, but you need to start thinking of yourself as an investment. There are experts out there who have the knowledge and time to help you. Speaking to an independent financial adviser can help you figure out exactly what protection you need and help you gain confidence to make informed financial decisions. They will provide you with tailored advice to suit you and your financial needs for the short term all the way through to the long term, meaning you’ll only be paying for exactly what you need.

Make sure you get in touch with a financial adviser so you can have peace of mind that your future is protected.

Informed Investor's content comes from sources that Informed Investor magazine considers accurate, but we do not guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk.


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