Debt is a normal part of life – whether it’s a mortgage on your first home, a car loan to get you from A to B, or a credit card you dip into every now and then. The problems start when debt becomes hard to manage.

As of September 2024, household debt in New Zealand reached 168% of gross income, from an average of 140% between 1991 and 2024. That means most of us are managing some form of debt while juggling day-to-day expenses and future goals.

It can work – until something unexpected happens.  

When your income stops, bills don’t

Unfortunately, financial commitments don’t take a break just because life throws you a curveball. Your mortgage, loan repayments and household bills still need to be paid – even if an illness, injury or death suddenly disrupts your income.

That’s why insurance can be such a powerful tool. While it can’t prevent the unexpected, it can help soften the financial blow, giving you and your loved ones space to recover.

Why your debt needs a back-up plan

Think about the goals you’re working toward: paying off your home, growing your family, building financial stability. Now ask yourself: what would happen to those goals if your income disappeared tomorrow?

Could your partner keep up the mortgage on their own? Would your savings last long enough to stay afloat? Without a plan, the financial burden could shift to your family at a time when they’re already dealing with emotional stress.

Insurance can help make sure your debts are taken care of – so your loved ones aren’t left trying to manage them alone.

Not just for worst-case scenarios

The idea of insurance often conjures up big events, but its power also lies in protecting your day-to-day. Depending on the type of cover you take out, it can also be there to help you:

• Keep up with loan repayments if you can’t work due to an illness or injury.
• Cover medical or living expenses during recovery.
• Avoid dipping into savings or selling assets under pressure.

Even a temporary sickness can throw your finances off track. That’s why having the right cover in place can make a big difference, by giving you more control, no matter what comes your way.

Customise your cover to your reality

There’s no one-size-fits-all approach to insurance, especially when debt is involved. The right cover for you depends on your income, your financial commitments, and the people who rely on you.

The goal is a safety net that fits your life, not someone else’s.

Let’s talk about what’s right for you

Managing debt is part of life. Insurance can be part of how you manage it.

Not sure where to start? A quick chat with an Insurance Link adviser can help you understand your options and build a plan that’s clear, realistic and actually works for you.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek financial advice.

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