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Serious Illness Equals Financial Trouble

Horizon Poll on behalf of Financial Services Council
Research
(February 2013)

New research has revealed what is being called the Financial Vulnerability Gap into which thousands of New Zealand households are falling each year when the main income earner falls seriously ill for more than six months.

The research, part of a major two-year project undertaken by the Financial Services Council, finds 85% of people aged 18+ do not have income protection insurance.

This equates to about 972,700 households nationwide.

The research also finds that within those households the incidence of the main income earner falling seriously ill and being unable to earn for six months or more is 2.6 times greater than the main income earner having an accident and receiving ACC payments for six months or more (where the Accident Compensation scheme covers 80% of earnings).

To read the full article and Download the full Horizon Research report revealing New Zealand households' vulnerability to income loss through serious illness click here


Income + illness

If they fall seriously ill, 45 percent of business decision makers would be unable to pay all their expenses and maintain their lifestyle just four weeks after sick leave and annual leave runs out.

This compares with 55 percent of households overall facing serious financial trouble after four weeks if the primary income earner falls ill.

New path-finding research by Horizon, conducted for the Financial Services Council, finds the incidence of serious illness, resulting in the primary earner being off work for six months or more, is 2.6 times more likely than being off because of an accident.

Eighty percent of earnings are covered by ACC when there is an accident. Serious illness is covered by the sickness benefit (about $341.60 a week for a couple with children). But it is tested on total household income, meaning about one million households, earning over $20,000 a year, are not likely to get the benefit. And only 15 percent of adults have income protection insurance.

How long could you continue to pay all your current house hold expenses and maintain your standard of living (after sick leave, annual leave and savings have been used)?

         All BUSINESS DECISION MAKERS BUSINESS PROPRIETOR/ SELF EMPLOYED BUSINESS MANAGER / EXECUTIVE
1 week100.0%100.0%100.0%100.0%
2 weeks80.4%86.5%84.3%89.0%
3 weeks66.1%75.5%78.5%79.8%
4 weeks58.6%70.6%72.5%73.7%
1 to 2 months45.3%54.3%54.7%30.1%
3 to 6 months32.9%40.3%45.4%39.4%
6 to 12 months24.7%30.3%33.4%30.8%
12 months or more19.7%23.1%27.0%24.6%