Mortgage Protection Insurance

Monthly mortgage repayment cover helps you and your family stay under a warm roof.


Table of Contents

What is Mortgage Protection Insurance?

Mortgage Protection Insurance is disability insurance that pays a tax-free monthly benefit if you cannot work due to an accident, sickness or mental illness to pay your bank debt or rental property and living costs.

It is common to confuse income protection and mortgage protection insurance, but they are somewhat different. Unlike income protection insurance, mortgage protection insurance is always tax-free and has no offsets and therefore has become more common in recent years.

Mortgage Protection Insurance

What are the benefits of Mortgage Protection Insurance?

Before you buy a house and accept the responsibilities of a mortgage debt repaid over several decades, you might consider protecting your home from a mortgagee sale or personal bankruptcy with mortgage protection insurance.

Mortgage protection insurance protects homeowners if a health issue arises and they become disabled. Some insurers also offer optional redundancy cover. In addition, supplementing Mortgage Protection insurance with a death benefit cover means your dependents could pay the mortgage balance if you died prematurely.

Some employers offer income protection as part of their employee benefits program.

Tax-free monthly benefit

  • You can use the benefit to pay your rental property or mortgage repayment
  • Tax-free monthly payout

Gives you money while sick or after an accident

A short-term or long-term disability can quickly deplete your cash reserves, leaving you vulnerable financially. And if your doctor has given you an unfavourable medical diagnosis or has experienced an accident, disability insurance will help protect your assets and equity.

No Offsets: Pays even if ACC pays

A disability can have a significant negative impact on your cash reserves and financial situation. Mortgage Protection Insurance pays even if you receive an ACC disability benefit, potentially resulting in two payments.

Financial wellness and independence

It is estimated that three of five New Zealanders will suffer a major illness in their lifetime before reaching retirement age, leading to extended time off work. Sickness or disease affects people of all ages, demographics and professions.


  • You can choose to pay stepped premiums or level premiums.
  • Available to permanent resident or citizen of New Zealand and some work visa holders may be eligible
  • Apply for cover between age 16 and 55, some insurers have extended to 60.
  • We always recommend chatting with an adviser about the right solution for you

Do I need mortgage protection insurance?

Accommodation costs are among the most significant bills people face, and New Zealand has some of the most unaffordable properties¹ in the world. With that in mind, it’s crucial to think about how you’d continue to pay your mortgage or rent if you or your partner lost your source of income.

If it would be difficult, or if you’re self-employed and not eligible for accident cover from ACC, then mortgage protection insurance, also called mortgage and rent cover, might be for you.

How does mortgage protection insurance work?

Mortgage protection insurance pays you an agreed sum each month if you cannot work. 

The payout can cover your mortgage or rent payments or up to 110 per cent of your mortgage payments or 45 per cent of your taxable income.

The benefits payout can last until you turn 65, but a shorter benefit period, such as two years, is far less expensive.

Cover Details

What is covered?

Tax-free one-off payment

There is no tax in New Zealand on Mortgage Protection Insurance, and therefore any benefit payout is tax-free. 

Top Financial Strength

All of the life insurance companies we compare have the best financial credit ratings, which means they can pay claims now and in the future.

Worldwide Cover

Policies provide you with worldwide cover, 24 hours a day.

Guaranteed Policy Upgrade

Future benefit improvements will be automatically applied to your policy. When things change, and it’s time to file a claim, your claim will be evaluated using the most favourable policy wording.

What is not covered?

Suicide and self-inflicted injuries in the first year

You are not covered if you die due to suicide or intentional self-injury within the first 13 months of taking the policy.

Not paying your premiums

Policies that have lapsed and cancelled have no cover.

Hazardous Activities and Pursuits

Some hazardous activities and pursuits are uninsurable.


Yes, you need Mortgage Protection Insurance if you or your dependents rely on your income to pay the mortgage debt, rent and living costs. However, it’s not a legal requirement from the lenders.

Life Insurance works similarly, as it supports your family financially with a tax-free lump sum payment if you cannot provide for them.

We can help suggest and recommend policies that fit your budget and needs.

Yes, for accident or injury-related claims.

No, for any illnesses such as stress, depression, cancer and more.

Many people mistakenly believe ACC will pay if they can’t work. The reality is ACC only provides cover for injuries resulting from an accident.

One advantage with Mortgage Protection Insurance is that if ACC is paying(accident or injury related), your Mortgage Protection also pays. 

Self-employed, contractors and business owners can restructure their ACC cover with CoverPlus Extra. And use the saved levies to buy comprehensive income protection insurance.

No, Mortgage Protection does not pay you out if you lose your job. However, some insurers offer optional redundancy insurance that pays out if you lose your job.

We compare the following insurers that offer Mortgage Protection:

  • AIA New Zealand
  • Asteron Life
  • Fidelity Life
  • Partners Life

Firstly, these two policies are complementary, not substitutes.
When both policies are taken out, you will receive effective and high-quality healthcare from the Health Insurance policy and an income from the Mortgage Protection Insurance while undergoing treatment and recovering.

Given the low level of disability support from the Department of Work and Income (WINZ), a Private Disability Benefit is usually the first port of call, ensuring that at least your essential bills and mortgage payments to your bank lender are made each month. That way, you are protecting your assets.

After all, we are fortunate in New Zealand to have the publically funded District Health Boards, which provide free healthcare across the public hospitals.

The short answer, Yes you can.

Once the claim is approved, it is up to you how you want to spend the money. Maybe pay rent to the landlord or repayments to your lender: day-to-day bills or the family lifestyle.  

What do I need to get a quote?

You won’t need any documents to get a mortgage protection insurance quote, but we will need:

  • your basic details
  • annual income
  • monthly mortgage payments
  • employment details