Sickness could destroy families: FSC
Annual premium income is expected to reach $2 billion in the next quarter on current trends.
And the amount of money in the economy from insurance payouts has grown by $230 million over the past three years.
In the year to December 2012, total personal insurance payouts for life insurance and income replacement insurance were $1.19 billion, 16.6% up on the year to December 2011, when payouts crossed the $1 billion mark for the first time.
Premiums in force also rose by $120 million during the year to a total of $1.96 billion.
But the council said New Zealanders were under-insured for loss of income from sickness.
Financial Services Council chief executive Peter Neilson said a two-year research project by the FSC showed just 15% of households had income protection insurance.
All were covered for the possiblity of an accident by ACC, but they were more than twice as likely to suffer a serious illness.
Neilson said: “Each year 15,000 primary income earners fall seriously ill and are unable to work for six months or more. For a person on the M tax rate, the sickness benefit is $341.60 a week and this is means tested. If another person from the household is earning income, many families find they are too rich to get a household income tested sickness benefit, but too poor to pay the rent, mortgage or food bills.”
He said most Kiwi families would not be able to pay their mortgage or rent four weeks after using up their annual or sick leave.
For someone on the M tax rate, the sickness benefit is $341,60 a week, means tested.
Neilson said: “If another person from the household is earning income, many families find they are too rich to get a household income tested sickness benefit, but too poor to pay the rent, mortgage or food bills.”
Good Returns looked at some of the statistics in detail here.