What mortgage protection costs

The first question with mortgage protection is what you are actually buying. Some products are life and terminal illness cover, sized to the loan and paying a lump sum. Some pay a monthly amount matching your repayment while you are unable to work, which is income protection wearing a mortgage label. Some bundle a short redundancy benefit on top.

Because those are different risks, their prices are not comparable. A lump-sum product sized to the mortgage is priced like life cover, which is the cheapest of the three. A monthly repayment benefit is priced like income protection, which is more expensive. Redundancy cover is narrow, time-limited and usually the most conditional part of any package.

The second question is where you buy it. Bank-arranged cover is convenient and is usually a single insurer’s product under the bank’s brand, which means one underwriting appetite and one set of definitions.

Bank-arranged versus the open market

The premium at the bank is not automatically higher. What is usually narrower is the choice: one insurer, one set of definitions, one underwriting appetite. If your health history is entirely clean and the wording is competitive, bank cover can be perfectly reasonable. If it is not clean, having only one insurer look at it is a real disadvantage.

These are the details that decide whether the cover does what you expected. Read them before you compare on price.

• Whether the sum insured is level or reduces alongside the loan balance — a reducing benefit costs less and pays less.
• Whether the policy is portable if you refinance to another lender.
• Whether the cover ends when the loan does, or continues as a personal policy.
• Who the beneficiary is, and whether your family has any discretion over the money.
• Whether a monthly benefit offsets ACC or other income, and what the waiting period is.
• Whether you were told you had to buy it to get the loan. You do not.

Every New Zealand insurer writes what life insurance costs in nz to its own wording, and the words are where the money is. Two policies that look identical on price can pay very differently when it matters. Closing that gap is the entire job of an adviser.

• Comparing lender cover against the open market is straightforward for an adviser and awkward to do yourself, because the products are structured differently.
• Where health history is a factor, having several insurers consider it is worth more than any premium difference.
• Personally owned cover generally follows you between lenders, which matters over a 25-year loan and several refinances.
• An adviser can size cover to the loan plus the income gap rather than to the loan alone.

There are three ways to buy life cover in New Zealand, and they are not equivalent. You can buy direct from one insurer, which means you see one product range and one underwriting appetite. You can buy through your bank, which usually means a single insurer’s product sold under the bank’s brand, often with narrower definitions. Or you can go through an adviser, who quotes several insurers at once and is required to put your interests first.

The premium you pay is the same either way. Insurers build adviser commission into their pricing whether or not an adviser is involved, so going direct does not get you a discount — it just removes the person whose job is to argue your corner at application and at claim time.

• An adviser can see which insurer is currently taking your health history on standard terms, and which one will load or exclude it.
• An adviser can structure cover across two insurers if that produces a better outcome than putting everything with one.
• An adviser handles the underwriting back-and-forth, and is the person who chases the claim when a family is least able to.
• An adviser has to document why the recommendation suits you, which is a written record you can hold them to.

We are a referral service, not an insurer. We do not quote premiums and we do not sell policies. What we do is put you in front of one licensed New Zealand adviser who can compare the market properly.

1. 1

   You tell us what you are looking at

   The form takes about a minute. Nobody asks for your medical history on a web form — that conversation happens with the adviser, properly, and only once you have decided to proceed.

2. 2

   An adviser calls you

   A licensed New Zealand adviser talks through your situation: who depends on you, what you owe, what you already have in place, and what you are actually worried about.

3. 3

   They compare the market

   The adviser quotes across the major insurers, checks which of them will take your health history on the best terms, and puts the options side by side in writing.

4. 4

   You decide, in your own time

   There is no obligation and no cost to you. If the answer is that you already have enough cover, a good adviser will tell you that.