Income Protection vs Mortgage Protection (NZ)
These two covers overlap, which makes them easy to confuse. Both help when you can’t work — the difference is in how much they pay and what they’re designed to cover.
What income protection does
Income protection replaces a portion of your whole income — typically up to around 75% — as a monthly benefit if illness or injury stops you working. It’s designed to keep your entire household budget going, not just one bill.
Because ACC only covers accidents and not illness, income protection is often the cover that fills the bigger gap for New Zealanders.
What mortgage protection does
Mortgage protection is more focused: it pays a benefit sized to cover your mortgage repayments specifically. Some policies also offer optional redundancy cover, which standard income protection usually doesn’t.
It’s often arranged alongside a new home loan, and can be a simpler, lower-cost way to protect the single most important payment.
How to decide
If your priority is keeping the roof over your head at the lowest cost, mortgage protection may be enough. If you want to protect your whole lifestyle — not just the mortgage — income protection generally goes further.
Many people end up with a mix. The key is not to pay twice for the same thing. A licensed adviser can compare the structures and make sure your cover fits without overlap.