Keep the mortgage covered if income unexpectedly stops

Mortgage protection NZ, common questions.

Quick answers to what New Zealanders ask us most. Something not covered? Give us a call.

• What is mortgage protection insurance in New Zealand?

  Mortgage protection (sometimes called mortgage repayment cover) pays a monthly benefit if illness or injury stops you working. The benefit is sized around your mortgage repayments and housing costs rather than your full income, which makes it a more affordable way to protect the home loan.

• How is it different from income protection?

  Income protection replaces up to about 75% of your income and is designed to keep your whole household running. Mortgage protection covers a narrower slice – your repayments plus allowable housing costs – at a lower premium. If your budget stretches to full income protection, that's usually the better cover; if it doesn't, protecting the mortgage is the sensible priority.

• How much mortgage protection can I get?

  New Zealand insurers generally allow up to around 115% of your mortgage repayments, with the extra covering rates, house insurance and body corporate fees. The benefit is also capped against your income – commonly around 45% of gross earnings – so it can't exceed what you actually earn.

• How much does mortgage protection cost in NZ?

  It depends on your age, occupation, health history, the size of the monthly benefit and the wait and benefit periods you choose. Because those factors vary so much between households, we don't publish indicative prices – an adviser can compare real numbers across the major NZ insurers and show you how the trade-offs change the premium.

• What wait period should I choose?

  A shorter wait, such as 4 weeks, means cover starts paying sooner and is the stronger option for most households. Longer stand-downs like 13 weeks can be landed on where there is genuinely enough sick leave and savings to bridge the gap, but they aren't suitable for everyone – it's a premium trade-off to talk through with an adviser rather than a default.

• What benefit period should I choose?

  To age 65 is the most common structure, because it's the only one that covers a claim that never ends – the scenario that would force a house sale. A 2 or 5-year benefit period is a trade-off some clients use to bring the premium down. An adviser can show you what that trade-off actually costs you.

• Does mortgage protection cover redundancy?

  Not by default. Standard cover responds to illness and injury only. Some New Zealand insurers offer an optional redundancy benefit, typically paying for up to six months after a qualifying stand-down period, with restrictions for the self-employed and for those in the first months of a policy.

• Do I still need it if I have ACC?

  Yes. ACC only covers accidents, and most long-term time off work in New Zealand is caused by illness – cancer, heart conditions, back problems and mental health. ACC also pays 80% of earnings, not 100%, and there's a stand-down before payments begin.

• Is mortgage protection the same as the bank's insurance?

  Not usually. Bank-arranged cover is often limited to one insurer's product and sometimes reduces in line with the loan. As independent advisers we can compare wordings, offsets and pricing across the main NZ insurers, and the cover stays with you if you refinance elsewhere.

• Are the benefits taxed?

  It depends how the policy is structured. Indemnity-style cover where premiums are deductible generally produces taxable benefits, while an agreed-value personal policy with non-deductible premiums is usually paid tax-free. We'll confirm the tax treatment of the specific policy before you take it out.

• What happens if I refinance or move house?

  The policy is yours, not the bank's, so it continues. If your repayments change materially we'd review the benefit amount – increasing it usually needs underwriting, but many policies include options to increase cover on a new mortgage without full medical evidence.

• Can I cover rent instead of a mortgage?

  With several insurers, yes. The same structure can be written against rent payments, which is useful for renters who want housing costs protected while they save for a first home.