What is income and mortgage protection insurance?

Income protection insurance and mortgage protection insurance are also known as disability insurance. They are designed to provide you with an income if you are unable to work due to getting sick or hurt.
Umbrella over house showing mortgage protection insurance for disability

Who needs income protection insurance?

Unlike some other insurance policies that offer a lump sum payment, income and mortgage cover offer a regular income replacement, typically a percentage of earnings. This means you can continue to meet your day-to-day expenses and maintain your standard of living even if you are unable to work for an extended period and let you focus on your recovery and return to work.

Remember ACC is very specific in what it covers, and won’t cover illnesses or anything that isn’t an injury! Therefore, if your household depends on all or part of your income to pay your every day living expenses and/or mortgage repayments, then you need to protect your income if you’re unable to work due to illness or injury.

How do income and mortgage protection insurance policies work?

If you are unable to work due to a medical condition, disability income protection insurance kicks in after a waiting period; this can be a number of weeks and/or after your sick pay ends. Generally the longer you wait the lower the monthly premiums. You continue to receive the replacement income until you recover and can return to work or until the policy's benefit period ends.

The benefit period varies depending on the policy and can range from a few years to until retirement age.

The benefit amount, waiting period, and duration of payments can all be varied and need to be based on your specific needs and circumstances. For example, spouses earning ability, debt repayments, extended family support.

There are many ways to structure disability products and a combination of mortgage and income policies to best suit your circumstances.

Disability policies are quite complex and you need to understand what you’re covered for so you can make a decision about whether it’s right for your situation. These policies often sit alongside trauma insurance policies, however they do work differently and have a different purpose.
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Did you know?

Did you know 87% of Kiwis insure their car, only 15% of Kiwis insure their income! It’s important you understand that your ability to earn an income is your biggest asset.

Frequently asked questions

When you set up your policy, you’ll decide how long the wait period is before you start receiving payments. There are a range of options – for most people a 4, 8 or 13 week wait is best. It all depends on how well you’d cope financially before payments kick in. The wait period also has an impact on the cost of the insurance.
This will depend on the type of cover you take out. Income protection policies ‘offset’ payments from ACC, although some may top up ACC payments. Mortgage protection policies don’t typically offset ACC payments. We can advise on the best way to structure your policies for you.

Meet our insurance experts

Anna-May, Kathryn, Melanie and Glyn have been providing personal insurance advice for many years. Choosing policy types, insurance companies and levels of cover. Adjusting policies as circumstances change and of course helping with claims.
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