When it comes to mortgage cover, many Kiwis have important questions about how it works and whether it’s right for them. While specific policies can differ significantly, here are the top 10 questions New Zealanders commonly ask about mortgage protection insurance.

1. What is mortgage protection insurance, and how does it work?
Mortgage protection insurance is basically an income protection cover, designed to help cover your mortgage or living expenses if you are unable to work due to an illness, injury, or disability. It can be calculated based on your income, your mortgage repayments, or your rent payments.
2. Do I really need mortgage cover if I have ACC?
ACC only covers injuries, not illnesses. If you are unable to work due to a medical condition such as cancer, heart disease, or mental health issues, ACC won’t help. Mortgage protection insurance fills this gap by covering a broader range of circumstances.
3. How much of my mortgage will be covered?
Policies typically allow you to cover up to 115% of your mortgage repayments or rent, or up to 45% of your gross income. The extra percentage (above 100%) can help cover additional expenses like rates or insurance.
4. What’s the difference between mortgage protection insurance and income protection insurance?
While both provide financial support if you’re unable to work, income protection is based on a percentage of your earnings. Mortgage cover can be calculated based on either your earnings or mortgage or rent payments. Using this calculation may give you a higher eligibility for cover (for example, if your mortgage payments are quite high).
In many cases, you can qualify for both at the same time. Talk to an adviser to see if this would be beneficial to you.
5. What happens if I return to work part-time after a claim?
Many policies include a Partial Disability Benefit, which allows you to receive reduced payments if you can work limited hours but still face a loss of income.
6. Are there waiting periods before payments start?
Yes, most policies have a waiting period before benefits are paid. Shorter waiting periods usually mean higher premiums .
7. What exclusions should I be aware of?
Common general exclusions include self-inflicted injuries, criminal activities, and pre-existing conditions. Some policies also limit cover for mental health conditions to a specific period (e.g., two years).
When applying for income or mortgage protection covers, it's very important to be up front about past or current injuries. While they may result in exclusions for those particular parts of the body, but it is always better to be honest. It's not a good outcome if you are paying premiums for X number of years, only to have a claim declined because something was not disclosed in the application.
In fact, at application time, applicants have a Duty of Disclosure to disclose anything which may affect the outcome of the application, or the decision of an underwriter.
8. Can I increase my cover if my mortgage repayments go up?
You can always make an application for additional cover, but your eligibility and health will be reassessed with each additional application for further cover.
Some policies include a Life Events Benefit, allowing you to increase your cover if your mortgage increases due to buying a new home etc. without needing further medical assessments.
9. Does mortgage protection insurance cover redundancy?
Redundancy insurance is a separate cover to income or mortgage protection. Mortgage protection is a disability insurance, not a redundancy (or pandemic) insurance.
10. Will my cover still apply if I move overseas?
Many mortgage protection policies provide worldwide cover, meaning you can still claim if you move or travel overseas. However, some insurers may have restrictions on how long you can be out of the country. It often depends on your visa/residency status in NZ. It's best to talk to an adviser about this.
Mortgage protection insurance can provide essential financial security, but policies vary widely. If you want to explore the right cover for your needs, get started here.
For a deeper dive into personal risk insurance, check out our Personal Insurance guide.
The information in this article is general information only and is not intended as financial, medical, health, nutritional, tax, or other advice. It does not take into account any individual’s personal situation or needs. You should consider obtaining professional advice from a financial adviser and/or tax specialist, or medical or health practitioner, in relation to your own circumstances and before acting on this information.
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