Mar 25, 2022 2:57:28 PM

All You Need to Know About Mortgage Protection Insurance

Topics: Insurance Advisers, Insurance, First Home Buyer 0

Many New Zealanders worry about what would happen to the family home if they were unable to pay their mortgage due to illness, an accident or death. Mortgage protection insurance helps reduce this worry, by taking care of the mortgage repayments and other expenses for a short time in the event you’re unable to cover these costs due to injury or health reasons. If you’re considering adding a mortgage protection insurance policy to your existing insurance policy, read on to find out more.


What is mortgage protection insurance?

Mortgage protection insurance covers your expenses when you’re unable to work due to health reasons, such as illness, disability, or mental health conditions, for a set period of time as indicated in your policy document. With mortgage protection insurance, you can choose how much cover you need, the wait period and the payment period. You can also add cover for redundancy with some insurers.

When does it pay out?

If you become injured or ill and can't work, once your wait period has finished, your insurer will make monthly claim payments which will continue until you're able to return to work, or until the end of your payment period, whichever is first.  

Like all insurance policies, there are exceptions and exclusions so it’s important you understand these. Here are some of the most common exclusions:

  • Deliberate injury or attempts to do so, including attempted suicide
  • Criminal behaviour that leads, directly to indirectly, to a claim
  • Lost income due to pregnancy (unless a disability lasts for more than 90 days after the end of a pregnancy)
  • Non-compliance with the treatment recommended by the attending treatment providers
  • If the policyholder is imprisoned
  • Pre-existing medical conditions 

Who needs mortgage protection insurance?

Having a mortgage protection insurance policy in place can provide homeowners with some peace of mind, knowing the mortgage repayments and other expenses are covered until you’re able to return to work. If you know you would struggle to continue repaying your mortgage if you were unable to work and earn an income, then mortgage protection insurance may be right for you.

What are the benefits of mortgage protection insurance?

When the unexpected happens, it’s reassuring to know you won’t lose your home. Your mortgage repayments can continue even when you’re unable to work and earn an income. And should the worst happen, mortgage protection insurance may pay out a lump sum in the event of death, which can be used to pay off the mortgage so the family can keep a roof over their heads and stay in the family home.

How do I get mortgage protection insurance?

Even a short-term illness that causes you to miss work can have a significant impact on your financial situation. While ACC may cover an injury or accident for a short time, it may not provide sufficient funds to continue paying your mortgage.

To find out if mortgage protection insurance is right for you, contact a Mortgage Express branded insurance adviser today. Because mortgage protection insurance policies can vary between insurers, it’s best to compare costs, inclusions and exclusions, and a Mortgage Express branded insurance adviser can help you with that.