A two-year Massey University study has shown New Zealanders are under-insured by $650 billion.

Lives were under-insured by $195.609 billion, permanent disability protection was lacking by $351.827 billion and income protection was under insured by $2.966 billion per month.

About 2000 respondents filled out an online survey that asked questions about their insurance cover, perceived needs and their reasons for not having more insurance.

The research found most New Zealand families had high levels of vulnerability to medium or long-term disability as a result of underinsurance.

FSC chief executive Peter Neilson said the research highlighted serious financial risks

More than half the respondents said they were suspicious of insurance companies and 43% found insurance jargon difficult. About 60% thought finding personal risk insurance was too hard.

Particularly among younger respondents, there was a view that it was too difficult to know what level of insurance was needed.

The data showed the idea that insurance premiums were unaffordable was the major barrier to taking out insurance.

More than a third said cost prevented them from having adequate cover in some way.

Others thought Government assistance would cover them in the event of an accident or illness that kept them off work.

But almost half said having the right level of cover was important to them.