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Mortgage Insurance

Your mortgage repayments are probably your biggest monthly cost. What happens to your home if you suddenly cannot work for an extended period (with No ACC or No sick pay or annual leave left)? What happens to your home if you suddenly die? Mortgage Insurance can take care of this by providing funds.

What does it do?

Mortgage Insurance is designed to provide a level of income to enable people to continue to make mortgage payments in the event they are unable to work for an extended period of time due to sickness, accident, and with most policies, also redundancy. The monthly payments at claim time are not usually affected by any payments the person may be getting from ACC or other sickness or disability benefits. Redundancy is usually covered for a period of 6 months.

Why have it?

In New Zealand, in today's world, many people require Two Incomes in order to afford their mortgage repayments. If one income is lost for even a short period due to sickness, accident, or redundancy, the ownership of the home may be at risk. Combined with Life Insurance, mortgage insurance provides couples and families with the assurance that if the worst happens, they will not likely lose their home. Redundancy cover is very useful with the unexpected loss of a job.

Options

  • Different waiting periods before payments start. The longer the waiting period, the less are the premiums.
  • Waiting periods: From 2 weeks to 2 years
  • Different benefit periods from 2 years to Age 65 or Age 70
  • Add Life Cover to your Mortgage Protection policy
  • Have cover up to 115% of your mortgage repayments.
  • Inflation adjusted cover - without the need for medicals.
  • Discount if Mental Health claims are limited to 2 years per claim.

Premiums

Mortgage insurance premiums are based on: Age, Male/Female, Health history, Smoker/Non-smoker, Occupation, and Pastimes. The level of cover (up to 115% of mortgage repayments), waiting period before claiming, and benefit period, all affect the premium. Premiums for mortgage insurance are not generally tax deductible. Some people weigh up the pros and cons of having an Income Protection policy (with higher income cover), plus life cover, rather than mortgage cover. To manage premiums covers are usually reviewed as life changes.

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Disclaimer: I provide information only. No statements or information on this website should be taken as "personal advice". As a retired Senior Insurance Adviser I can no longer provide advice or arrange insurance for you. Before taking out an insurance policy or making changes to existing covers it is usually wise to meet with a Registered Financial Adviser. This website is a Free Community Service to New Zealanders.
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