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18 Jan 2022

Own a house? How to protect your mortgage payments

Do you own a home with a mortgage? First of all – congratulations on being a homeowner. It’s a big milestone; something worth celebrating every day, and most importantly, worth protecting over time. By taking out an appropriate level of cover, you can secure your ability to repay the mortgage, and protect the roof over your family’s head. Read on for some common insurance types for homeowners.

Mortgage Protection Insurance

As the name aptly suggests, mortgage protection insurance is specifically designed to financially protect mortgage borrowers from the unexpected.

Specific terms and conditions apply depending on the insurer. But generally speaking, mortgage protection is designed to cover the cost of regular monthly mortgage repayments, if you are suddenly unable to work due to a serious illness or injury.

You can choose how much you’d like to protect (usually, the entire mortgage payment amount), the payment period, and the wait period (the timeframe between your claim and when you start receiving your payments).

It’s important to note that your mortgage interest rates may increase in the future. In this case, most insurers would allow you to increase your mortgage protection, however terms and conditions may also apply. Get in touch if you’d like to learn more.

Income Protection Insurance

Many homeowners also consider income protection insurance. This is designed to secure your ability to pay your expenses, by providing a replacement income should a serious illness or injury put you off work for an extended period of time.

Unlike mortgage protection insurance, income protection isn’t just limited to mortgage repayments. Usually, you can insure up to 75 per cent of your gross pre-disability income, to cover any expenses you might have. And while the amount is tied to what you earn, you can tailor your policy to your needs and budget by choosing a benefit amount, benefit period, and waiting period.

So, how much is enough income protection? The answer to this question depends on how much income you need to meet your debt and living costs. If you have a mortgage, it’s important to factor in that amount as well as other ongoing financial commitments and living expenses.

Insurers generally allow customers to change their level of income protection as their income changes, so regular reviews are key. Please don’t hesitate to contact us: we can help you ensure that your cover keeps up with your circumstances and remains adequate to cover your financial commitments and living costs.

Life Insurance and Trauma Insurance

What would happen if you passed away or became seriously ill? It’s not a pleasant thing to think about, we know. But it’s also a risk worth protecting against, especially if other people depend on you financially and/or you have big financial commitments such as paying a mortgage.

As a homeowner, you can use life insurance to cover your mortgage, and maybe add extra cover, for example to repay debt in full or provide your family with a replacement income. If you pass away or become terminally ill, the life insurance benefit will be paid out as a tax-free lump-sum to your designated beneficiary.

Depending on your needs, you may also consider taking out trauma insurance, either as an optional add-on to your life cover (‘accelerated trauma insurance’), or as a stand-alone benefit. In short, trauma insurance is designed to pay out a lump-sum benefit if you’re diagnosed with one of the serious medical conditions listed in the policy. Covered conditions vary from insurer to insurer, but most policies include things like cancer, strokes, and heart attacks.

This type of cover can give you and your family an additional level of protection, and importantly, you can use the trauma payment as you like – including (but not limited to) mortgage repayments. If you’d like to learn more about this, get in touch: we’re here to answer any questions you may have.

We’re here to help

Please don’t hesitate to contact us. As insurance advisers, we can help you understand your insurance needs and protect your most important assets from the unexpected.



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 developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.

Link Financial Group Ltd trading as Mortgage Link and Insurance Link FSP 696731 holds a licence issued by the Financial Markets Authority to provide financial advice. Insurance Link (NZ) FSP 446867 is authorised by that licence to provide financial advice. Please visit for more information and Disclosure information.