Mortgage payment protection insurance specifically ensures that the monthly payments to meet your mortgage obligation will be paid, thus giving you peace of mind of not losing your home to mortgagee sale if you are hospitalised, being treated for an illness, or suffer an accident.


Generally, mortgage protection insurance is designed as short-term protection, providing mortgage loan repayments for up to 2 years or to age 65 year at a maximum coverage amount of 110% of your monthly mortgage payment to factor in mortgage-related costs, such as buildings and contents coverage and life assurance.

NB: Asteron now has a new product that allows you to cover 40% of your gross income under MRI Insurance which allows you to claim ACC + MRI cover should you have an accident.


What Mortgage Repayment Benefits Provide

When mortgage repayment benefits are added your risk portfolio, you have no income offsets. This means any sick pay benefits from your employer and/or personal injury compensation, if applicable, from the ACC will not reduce the amount of mortgage repayment benefits you receive during the time you are unable to work.

Furthermore, mortgage repayment coverage is an agreed value benefit, so your insurance payouts are not taxable. And because mortgage repayment insurance is capped at 110% of your monthly mortgage loan payment, you have the option of adding income protection insurance to it so you can receive coverage for your income. When you take this option out we reduce the amount on your income protection side not your mortgage repayments.

Income Protection Insurance Overview

Income protection coverage is designed to replace up to 75% of your income if you are unable to work for a long period of time. The payments you receive from income protection insurance can be used to pay whatever expenses you choose, including your monthly mortgage payment.

However, with income protection, there are income offsets, which means if you qualify for sick pay from your employer or ACC, your income insurance payouts could be reduced accordingly – depending on the policy type.


Mortgage Repayment vs. Income Protection

Your specific situation will dictate whether mortgage protection insurance with mortgage repayment benefits is better for you than income protection. Some people find income protection insurance more beneficial because it provides long-term payouts, covers more than just your mortgage and provides greater protection. On the other hand, those with a healthy savings account find mortgage protection with mortgage repayment benefits adequate and some people like a combination of both.

Cost wise you would pay about the same if your repayments were of equal value with your income, but when split with income protection and mortgage repayments you can tap into a nice top up should you ever claim on ACC long term collecting both MRI and ACC. Something you can’t do with IP cover alone.

If you need help figuring out which coverage is best for you, you can count on to give you unbiased guidance that is based solely on your specific circumstances and budget. Our goal is to ensure you are properly insured in the event the unexpected happens.

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