When we talk about ‘protecting the family’, most Kiwis immediately think about life insurance. It makes sense, a safety net in the form of a lump sum payout to help clear the mortgage, take care of debts and provide loved ones with some financial security in the event the unthinkable happens.
But here’s the reality – far more often, people face challenges that don’t end in death. Illness, injury, or redundancy can suddenly take away your ability to earn, leaving the household finances stretched thin. That’s where income protection and mortgage protection come in. These policies are designed to stand alongside life insurance creating a safety net that looks after both the ‘what if’ or the ‘what now’.
Life insurance is about the long-term. It’s the plan that ensures your loved ones can keep their future intact if you’re no longer here to provide for them. But what if you’re still here, just unable to bring home a pay cheque…
That’s where income protection comes into its own. By replacing a portion of your regular income, it gives you the breathing space to focus on recovery instead of worrying about how to keep the power on or the groceries stocked. For many families, this kind of cover is used far more often than life insurance because the odds of being unable to work due to illness or injury are much higher than the odds of passing away early.
Mortgage protection is even more targeted. It’s designed with one job in mind, keeping your home secure. At a time when mortgage repayments are often the single biggest monthly expense for Kiwi households, knowing that your repayments will still be made if you can’t work brings huge peace of mind.
It’s easy to think of these insurances as interchangeable, but they’re really not. They each answer a different question:
When you see them together, it’s clear they’re not competitors, they’re complementary. One looks after the long-term future, while the others protect the here and now.
Consider a couple in their 30’s with two kids and a $700,000 mortgage. If both have life cover, if one of them were to die unexpectedly, their policy could pay off the mortgage and help the surviving partner raise the children. However, if the main income earner was diagnosed with an illness and needed to take a year off work, life insurance wouldn’t kick-in. In the meantime, in addition to dealing with the emotional and physical toll of the diagnosis and treatment, the family will still need to pay the mortgage, buy uniforms, keep the lights on, and food on the table – all without their main income stream coming in. That’s where income and mortgage protection policies become invaluable.
For self-employed Kiwis and contractors, the impact can be even starker. With no sick leave or redundancy payouts to fall back on, a period out of work can quickly wipe out savings. Income protection in particular can be the difference between a business surviving, or being forced to close.
We’re living in a time of financial pressures. Mortgages are bigger, interest rates are higher, and the cost of living keeps rising. Most households don’t have months of savings sitting in the bank. In that environment, the financial shock of lost income is sharper than ever.
Insurance is about reducing risk, and the truth is that while we all hope never to need it, too many families find out the hard way how crucial it can be. Life cover ensures your loved ones’ future isn’t detailed. Income and mortgage protection ensure your present doesn’t unravel along the way.
The best protection for you and your loved ones may not be a single policy – it’s making sure you have the right mix of cover that balances your immediate needs with your long-term security. Life insurance makes sure your family can move forward in you’re gone. Income protection helps you maintain your lifestyle when illness or injury holds you back. Mortgage protection keeps your home safe in the meantime.
Together, they form a safety net that lets you live with confidence today, knowing that if the unexpected happens, tomorrow if taken care of too.
If you’d like a review of your current cover, or if you need to get a new policy in place, book a free review with one of our insurance team. They will assess your needs and provide you with personalised recommendations. As a bonus, for every review booked this month, you will not only get great advice, but you’ll also go into the draw to win $5,000 cash. That’s money you can use to spend, save or invest as you like! Click here to book your complimentary review.
The content of this article should not be taken as financial advice, or a recommendation of any financial product. These insights are based on current economic commentary, market pricing for interest rates, and our personal opinion. Threefold is not liable or responsible for any information, omissions, or errors present.