Mortgage Protection Insurance

New Zealanders are some of the world’s biggest spenders when it comes to housing. In fact, 17% of Kiwis spend more than half their household income on mortgage or rent payments - 6% higher than the global average.

However, in 2022, 53% of mortgage holders were stressed about their payments . Moreover, a 2024 NZ Financial Services Council study revealed that over 1.5 million Kiwis couldn’t access $5,000 within a week unless they went into debt.

Mortgage protection insurance provides a monthly payment to cover your mortgage repayments, rent, and other expenses, so even if you can’t earn an income due to illness or injury, you can still keep your home. 

How does mortgage protection insurance work?

Mortgage protection insurance pays out a tax-free monthly benefit if you're unable to work due to an illness or injury that leaves you totally or partly disabled. On top of your monthly benefit, the best insurance plans also support your rehabilitation, retraining, and recovery. Note that if you have pre-existing conditions, insurers may exclude those from your cover.

You can customise your policies to suit, such as by choosing a waiting period or benefit period that fits your financial situation. Some insurers also allow you to select optional add-ons, such as redundancy cover and extra payments if you suffer a specified injury or critical illness, like cancer, heart attack, or stroke. 

Your mortgage protection policy kicks in after the waiting period and will finish once you’re no longer totally or partially disabled or when your benefit payment period ends. 

Why compare mortgage protection covers?

By comparing mortgage protection insurance providers, you’ll find the right cover tailored to your circumstances. Policies can differ in premium costs, cover limits, and exclusions, so it's a good idea to weigh up your options with the help of an insurance adviser.

Choosing a trusted insurance broker, like Policywise, offers:

• Access to a range of policies: Policywise provides comparisons between multiple top-quality providers so your final choice is based on well-researched information.
• Expert advice: Policywise brokers guide you through complex insurance jargon and ensure you understand your cover.
• No added costs: Using a broker like Policywise does not increase the cost of your premium, meaning you receive professional guidance without any additional expenses.

Do I need mortgage repayment insurance in New Zealand?

In 2024, over two million New Zealanders said they were not prepared for the possible loss of income of their main household income earner.  A third (31%) of Kiwis would be able to cover their living expenses for only a month or less if they lost their job tomorrow.   

Some New Zealanders have financial backups - such as employer-provided sick leave or subsidised workplace insurance, but these don’t usually offer complete protection. Additionally, employee sick leave is often limited in duration and might not cover long-term or permanent disability or chronic conditions.

ACC (Accident Compensation Corporation) may not be adequate or appropriate for your needs, either. Although accidental injuries and work-related gradual conditions come under ACC, illnesses or diseases like cancer, or sudden events like stroke or heart attack do not.

It makes sense, then, to consider mortgage protection insurance to help you continue to meet your housing repayments if your income is disrupted or ceases because of a critical illness or disability.

Features and benefits

Mortgage protection insurance is designed to cover your mortgage or rent payments in case of unexpected life events. However, the specifics can differ significantly between insurers, with benefits, cover limits, and exclusions varying according to the policy. Some might offer more comprehensive support for recovery, rehabilitation, and retraining, while others could provide better redundancy protection.

Working with an insurance broker, like Policywise, gives you access to expert advice and a range of policies from top insurers, removing the time-consuming hassle of having to search on your own.

This table compares some key features of mortgage protection insurance from various New Zealand insurers:

Mortgage protection insurance vs income protection, life, and home insurance

Mortgage protection insurance isn’t the only option available to safeguard your home. Alternative products such as income protection and life insurance provide equally valuable cover.

Mortgage protection insurance vs income protection 

Mortgage protection and income protection insurance both provide monthly benefits if you need to stop working due to an illness, injury, or disability. You can use the regular payments to cover your mortgage or rent and other expenses. These insurance products differ primarily in how your monthly payments are calculated and whether these will be reduced by other benefits you’re receiving.

Mortgage protection benefits are calculated on either your income or your mortgage repayments and do not usually offset ACC.

Income protection cover is computed based on your income and may be reduced by your ACC compensation, sick leave payments, and other benefits received.

Mortgage protection insurance vs life insurance

Mortgage protection and life insurance have three main differences: how benefits are calculated, how often you’ll receive a benefit, and what conditions are covered.

Mortgage protection provides a monthly sum if you cannot work due to an illness, injury, or disability. Your monthly benefits are calculated either on your income or your mortgage repayments. 

Life insurance pays out a tax-free lump sum in the event of your death or a terminal illness diagnosis giving you less than a year to live. You choose the lump sum amount when you buy a policy. Your loved ones can use the life insurance benefit for home loan payments and other expenses.

Mortgage protection insurance vs home insurance

Home insurance covers damage to your property and eases the financial stress caused by events such as fire, theft, or natural disasters, ensuring that you can afford repairs or replacements.

Mortgage protection covers you against loss of income if you can’t work due to an illness or injury, ensuring your mortgage or rent payments are maintained.

Mortgage protection insurance cost comparison

The costs of mortgage protection insurance vary depending on your age, mortgage repayments, chosen waiting period, and other factors. Below are estimated premiums from trusted mortgage protection insurers.

Why choose Policywise as your mortgage insurance broker

Securing the right mortgage protection insurance by working with an insurance broker, like Policywise, offers several advantages over dealing directly with individual insurance companies. Policywise is a 100% free service, offering fast, comprehensive, and easy-to-understand comparisons of all leading providers, and a simple summary clearly recommending which insurer is best for your situation.

We’ll answer your questions, provide experienced advice, quotes, and comparisons, and manage all the back and forth throughout the application process. Taking out your cover through us means you'll have our lifetime support and claims advocacy, and we'll help you negotiate a positive outcome at claim time. We can also take care of lodging any claims on your behalf and back you up if the going gets tough.

Ready to protect your home? Contact Policywise today and let our expert brokers help you find the perfect mortgage protection insurance.