Serious illness a greater risk than accidents to Kiwis under 40

22 April 2016

While recent research suggests that the majority of Kiwis say they don’t expect help from Government if they were suddenly unable to earn an income, many appear to be putting too much misplaced trust in Government and ACC due to skewed perceptions.

A recent AMP survey1 of more than 600 Kiwis aged between 18 and 39 ahead of the launch of AMP Essentials2 - New Zealand’s first combined life, trauma and temporary disablement insurance product, linked with the AMP KiwiSaver Scheme - suggests that only 16 per cent of Kiwis under 40 hope the Government can help support their families if they are unable to earn an income for six months or more.

Twenty-eight percent claim they don’t like the idea of relying on someone else.

Misplaced reliance on ACC for income protection

But the reality of what’s happening is far different from what we say and believe, said Therese Singleton, AMP’s General Manager of Insurance and Investments.

Therese points to a Financial Services Council (FSC) report3 that indicates at least a quarter of us mistakenly believe that we are more likely to suffer an accident (and probably get an ACC monthly cheque for our troubles) than a serious illness.

“In fact we’re 2.6 times more likely to suffer a serious illness than have an accident. Our Plan B in terms of ACC, as it turns out, isn’t really a very good one,” she said4.

Dependence on partner could lead to hardship

The reality is that our other Plan C’s aren’t likely to be very good either.

When asked by the AMP survey what they would do if they could not work for more than three months due to illness, a quarter of New Zealanders surveyed indicated they would rely on their partner for support (27%).

In addition:

  • 30-39-year-old respondents are more likely to rely on their partner (32%) in comparison to 18-24 year olds (15%).
  • Female respondents are more likely to rely on their partner (37%) in comparison to male respondents (13%).

Even worse, four in six respondents to the AMP survey said they spend nothing on income protection (68%).

The FSC study said there is ‘evidence of widespread inadequate insurance with 54 per cent of main income earners being more than 20 per cent underinsured for life insurance and 43 per cent being over 40 per cent underinsured’.

Two income families unlikely to get low level sickness benefit

As pointed out in the FSC Income Study report4, the accident victim could get about 80 per cent of his or her income from ACC, but victims of serious illness (who do not have income protection) will have their household income means tested by the Government before they are entitled to low level Jobseeker Support or Disability Allowances.

Ask yourself, can you live on that?

“Of course, you will probably only get a benefit if your partner is not working. If your family is on two incomes, the sick person often gets nothing. The FSC reported that every seventh home with an income earner can tell a story of the main earner falling seriously ill and being off work for six months or more during the past five years.

“Don’t wait and depend on others for your safety and security. Take steps to make sure you’re prepared,” Therese said.

AMP launches low cost income protection

AMP recently launched AMP Essentials to help make basic life, trauma and temporary disablement cover accessible to Kiwis under 40. It is only available to people who are also members of the AMP KiwiSaver Scheme, but is designed to be low cost and can be purchased online.


1606 participants completed the AMP Essentials survey. Margin of error+/-4% at the 95% confidence of interval (considered an acceptable margin of error).

2AMP Essentials is available to existing AMP KiwiSaver Scheme members only (members as at 21 March 2016. The offer is only available from Monday, 11 April for 60 days).

3The Financial Services Council (FSC) Insurance Gap investigation surveyed 2,000 New Zealand households in 2011.

4The Financial Services Council (FSC) Income Study 2013.

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The content provided is intended to be used as information only and does not constitute financial advice. Before acting on any of the results provided, we recommend that you seek advice which takes your individual circumstances into account.

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