Our 5 Preferred Mortgage Protection Insurance in NZ
David Harris
| Last Updated: December 2020 Image Credit: StreetSide Calgary
Your mortgage is an important payment that you can’t fail to pay… but what if you became terribly sick or injured and become unable to work and pay for it? Fortunately, we’ve put together a list of mortgage protection insurance in NZ here.
Mortgage protection policies can be simple and straightforward. But since we all have different needs, budget, and lifestyle, it can be difficult to know which policy to get.
That’s why we’ll first guide you through the basics of choosing mortgage protection insurance. Hopefully, this will help you in selecting from our product list afterwards.
How to Choose Mortgage Protection Insurance
Mortgage insurance covers your monthly expenses in the worst event that you become physically unable to work. These expenses include things like the mortgage, rent, and utilities.
Each policy has different benefits, terms, and exclusions. It’s not ‘one size fits all’ since people differ in expectations, needs, and mortgage balances.
We’ve listed down the things you have to consider in mortgage protection insurance policies. Here they are:
1. Flexibility
Because people have different needs and budgets, the policy should be tailored to them. Besides, it’s important that they find the right policy that will give them the best value for their money.
All of the companies we listed below allow you to customise your policy. An insurance adviser is there to assist you, of course.
Areas you can customise your policy include adding the benefit/s you want, changing the wait period, cover term, and cover amount.
2. Cover Amount
This is the payment you will receive from your insurer every month. This covers your mortgage and additional costs like income, rent, and household expenses.
The payout can either be a percentage of your gross income, typically up to 75% or between 110% and 125% of your mortgage premiums.
Some companies may offer higher cover amounts or payouts than others. You should check with each of them to know which one fits your plan or budget best.
3. Benefits
You should see each policy if it has the benefits that you need. Each of the benefits have different coverages and cover terms.
For example, some benefits will only apply to those who have been totally disabled. There are also benefits that let you suspend the cover for up to 12 months for parental or unpaid leave.
A standard policy has built-in or main benefits. All of them have optional or add-on benefits which can be useful to add to your current policy.
Be wary though, as this entails extra costs for your premiums.
4. Wait Period
As we mentioned, the wait period is one of the things you can customise. The wait or excess period refers to the ‘free period’ before you get your mortgage payout.
This can vary from one insurer to the next. It is typically in multiples of 2 and 13 — 4, 6, 8, 13, 26, 52, or 104 weeks.
During the wait period, you would need to pay the mortgage on your own. You should be able to settle it before your payout kicks in.
5. Cost
A great tip: before buying insurance from any insurers, including the ones we listed below, you should always compare quotes amongst insurance companies to get the best price.
We recommend getting quotes from LifeDirect, an online insurance comparison tool. It will also give you insights as to which one is the better policy option for you.
Apart from that, LifeDirect can even liaise with an insurance broker to get things started for you.
6. Terms and Conditions
You have to understand the fine print before buying a policy. That clarifies the benefits you can get, in addition to the exclusions and exceptions, so you won’t be surprised.
Knowing the things that are and aren’t covered in the policy, it’ll help you know where you stand. Thus, you’ll have higher chances of your claim to be accepted.
Mortgage Protection Insurance in NZ
Having gone through the basics, you now know how to pick from our selection. Without further ado, here are our choices for mortgage protection insurance in NZ!
1) Asteron Life Mortgage & Living Insurance
For Flexible Mortgage Protection Insurance
Asteron Life’s Mortgage & Living Insurance gives you flexibility in structuring your cover, premiums, and whether you want to add reliable optional benefits.
You can tailor your level of cover to suit your lifestyle, budget, and needs. A third-party insurance adviser can help you know which cover is best for you.
You’re going to get regular entitlements to continue your mortgage payments as you recover back to your work life.
Take note that each year, the premiums will get higher. However, you could transition to level premiums depending on your income and mortgage payments.
Their additional benefits can be useful. These include a ten-hour benefit (allows you to work while getting mortgage protection), mental health discount, redundancy etc.
Pros
- Regular payments
- Customised options for your cover and premiums
- Fair and knowledgeable advisers
- Great list of benefits
- You can boost the cover further with optional benefits
- Allows you to transition from step to level premiums
Cons
- Relatively higher premiums
Customer Reviews
Even though some clients criticised Asteron Life’s customer service, others said that they were helpful and professional and have a great claiming process:
One client from Cooper Farrier Services Ltd wrote this:
“Efficient and clear cut with their information. Mike O’Sullivan has always been helpful and professional in his advice, and Asteron have been great to deal with.”
2) Fidelity Life Mortgage Protection Insurance
For Mortgage Protection Insurance with Personable Service
According to MindTheGap, 47% of Kiwis between ages 18 and 64 can’t survive over a month without their income, much less pay their mortgage.
Thankfully, the Fidelity Life mortgage protection policy has you covered. You can opt to be covered for up to 40% of your gross income or 110% of your mortgage payments.
You also have the option to select your benefits and wait period. For the benefits, it can be 2, 5 years, or until you retire. For the wait period, you can choose from periods of 2 weeks up to 104 weeks, in multiples of two.
In addition, the team can support you with your rehabilitation programme. With this, you’ll regain your biggest financial asset—your ability to earn income from your job.
Pros
- Monthly mortgage repayment cover
- You can choose how much you’re covered
- Rehabilitation support
- Flexible wait and benefit periods
- Friendly and helpful service
Cons
- No policy discounts or promos
Customer Reviews
Very few people complained of their claims not being accepted. However, other clients claim that Fidelity Life’s insurance team has been friendly and easy to deal with.
Here’s a comment posted by one reviewer, EK:
“A great insurer to deal with. Fantastic products, well-priced and a nice team to work with.”
3) AIA Mortgage Protection Insurance
For Overall Mortgage Protection Insurance
In case your earning capacity is badly affected by sickness, injury, or accident, it’s a great idea to insure yourself with AIA Living Mortgage and Income Protection.
This will provide you with regular monthly payments to cover your mortgage, rent, and household expenses. When paying your premiums, you can even accumulate Airpoints for each of them!
The AIA Living Mortgage and Income policy don’t have ACC offsets though, meaning the payments you will make remain the same over the course of your policy.
However, it has a comprehensive range of benefits which can come in handy. Recurrent Disablement benefit, Vocational Assistance, and Childcare Support are some of them.
Also, you may want to add redundancy cover for your peace of mind. With it, you’ll have no worries about supporting your family if worse comes to worst.
Pros
- Covers your monthly mortgage instalments or other expenses
- Optional redundancy cover benefit
- You can get mortgage protection through other AIA Living products too
- Rewards you with Airpoints on eligible policies
- Complete range of benefits, plus premier cover and optional add-ons
- Premium waiver benefit if you’re totally disabled
- Friendly, responsive, and helpful staff
Cons
- Doesn’t have ACC offsets
Customer Reviews
Melissa M. shared her experience in dealing with AIA Insurance:
“Awesome company. Will definitely look after you at claim time and always has their customers best interests at heart. Location is very convenient. Customer car park available not far from cafe and food court nearby.”
Furthermore, another client, Urmila, stated:
“Don’t have to wait for your claim very long. Claims are done within 24 hours. Very nice and friendly staffs who know their work well.”
4) Partners Life Mortgage Repayment Cover
For Mortgage Repayment Insurance for a Great Experience
Partners Life is a preferred life and health insurer with a strong credit rating. They value their customers’ needs, especially when they have the need to claim.
Their mortgage repayment cover pays you a sum every month if your sickness or injury has prevented you from working.
This bespoke policy will cover your distinct needs and circumstances. This ensures that you’ll be able to pay off all your mortgage debts.
Similarly, you can choose whether your insurance protects you for a short, specific period or up until the day you retire.
If you aren’t sure, you can discuss it with their adviser about your insurance needs and possible options. As such, your policy will be an investment you can use in the future.
Pros
- Bespoke mortgage protection insurance
- Pays you a monthly amount
- Their products can be structured for the short or long term
- Provides decent advice to clients
- Great experience and team
Cons
- Some clients have had problems for getting claims
- Delayed response for some policyholders
Customer Reviews
For a few customers, their claims have been rejected after waiting for quite some time. On the other hand, some customers say that the team had been supportive and helpful, providing them with great service.
Let’s read about Rory’s review about Partners Life:
“I have been a customer of Partners Life for sometime now and have all round had a great experience! My broker from Aurora Insurance has also made the process so simple and easy to understand! 10/10!!”
Also here’s a review from another satisfied client, Tim:
“Partners Life is a Great NZ Owned Insurance Company. I am an Insurance Adviser and I have my own Cover with them. They have been FANTASTIC to deal with, with my own claims, and for each and every claim of our clients. They have very comprehensive products which generally means more opportunity to claim. To all those who have had a negative experience with Partners Life I would say that mishaps do happen of course and it is sad that you have had a bad experience, but I can say for a certainty that if you get decent advice from a diligent Insurance Adviser up front, you will have a nice experience with this company.”
5) Cigna Mortgage Repayment Cover
For Affordable Mortgage Protection Insurance
Cigna offers the most affordable mortgage repayment cover in this list. However, the big trade-off is that it only has limited benefits.
Unless you buy the Optional Mortgage Deluxe package, you will only get the main cover, which includes total, partial, and recurrent disability benefits, as well as the life events benefit.
The life events benefit enables you to increase your cover amount by up to $1,500 if you have a life event without you needing to do any medical assessment. This could be a raise in your pay or an increase in mortgage payments.
Moreover, you can select your waiting period, payment terms, and payment frequency. For the payment frequency, you can choose to have it done weekly, fortnightly, monthly, half-yearly, or yearly.
Of course, you can customise your policy term to be 2 or 5 years, or up to when you are 65. It can even be set up to age 70 too, although conditions will apply.
Pros
- Pays you a monthly amount if you become totally disabled from illness or injury
- Waiting period and payment term choices
- Extensive cover if you purchase the Optional Mortgage Deluxe
- You can also add redundancy cover for your policy
Cons
- Limited built-in benefits
- Poor customer service
And that finishes our picks for mortgage protection insurance in NZ! Eventually, your mortgage debt will be paid off and you and your family will be able to move into your new home.
Do you have any questions or suggestions about this list? If you have one, please leave us a comment below, and we’ll check them out as soon as possible.
Besides mortgage insurers, we also listed mortgage brokers in Auckland. They can simplify the process of getting a loan for you to buy the house you’ve always wanted.
