Calculate the mortgage protection insurance cover and estimated monthly premium needed to keep paying your mortgage if illness or injury stops you working. Mortgage protection (also called Mortgage Repayment Cover or MIRC) provides a monthly benefit tied directly to your mortgage repayment, and is typically 20 to 30% cheaper than full income protection insurance.
Unlike ACC (which only covers accident-caused injury and pays only 80% of pre-injury income), mortgage protection covers illness too - including the most common causes of long-term inability to work: cancer, heart disease, stroke, and mental illness. Most NZ insurers cap the monthly benefit at the lower of 115% of your mortgage repayment or 45% of gross income.
This calculator uses current 2026 rates from AIA (MIRC), Chubb Life (Mortgage Repayment Cover), Fidelity Life, Partners Life, and Asteron Life. Stats NZ data (Household Disability Survey 2023) shows 17% of New Zealanders (851,000 people) have a disability, with illness being the primary cause in adults of working age.
ACC only covers accidents. It does NOT cover illness-caused inability to work such as cancer, heart disease, stroke, mental illness, or chronic conditions.
According to Stats NZ Household Disability Survey 2023, 17% of New Zealanders (851,000 people) have a disability. For working-age adults, illness is the most common cause.
If ACC does cover your injury, it pays 80% of pre-injury income. Any mortgage protection payout over $7,500/month across all AIA policies is typically offset by ACC weekly compensation. The biggest value of mortgage protection is for illness-caused inability to work.
Mortgage protection insurance in New Zealand (also sold as "Mortgage Repayment Cover" or "Mortgage, Income or Rent Cover") pays a regular monthly benefit if you cannot work due to illness or injury. The benefit is tied directly to your mortgage repayment rather than a percentage of your salary, making it a narrower but more affordable version of income protection.
The monthly benefit is typically capped at the lower of 115% of your mortgage repayment or 45% of your gross income. This prevents over-insurance while providing a practical buffer for rates, insurance, and basic living costs during recovery.
| Feature | Mortgage Protection | Income Protection |
|---|---|---|
| Benefit scope | Up to 115% of mortgage OR 45% of income, whichever lower | Up to 75% of pre-tax income (tiered) |
| Typical premium | Lower (20-30% cheaper) | Higher baseline |
| Best for | Homeowners wanting focused, affordable protection | Full living cost replacement |
| Covers living costs? | Only via buffer / 45% of income cap | Yes, broader replacement |
| ACC offset applies? | Yes (generally above $7,500/mo) | Yes (generally) |
| Tax treatment (indemnity) | Premium deductible, benefit taxable | Premium deductible, benefit taxable |
Many Kiwis hold both: a smaller income protection policy for general living costs, plus mortgage protection to specifically lock in the home. Alternatively, a single higher income protection policy can cover both needs.
ACC (Accident Compensation Corporation) provides no-fault injury cover funded by levies. Key limitations:
The 2026/27 ACC earners' levy rate is 1.75% of liable earnings, with maximum earner levy of $2,741.22 per year. (Source: Accident Compensation (Earners Levy) Regulations 2025, effective 1 April 2026.)
Stats NZ Household Disability Survey 2023 (released 27 February 2025):
The Horizon Poll 2015 found that around 55,000 Kiwi families experience their main income earner having to stop working for three months or more each year due to illness.
Longer waiting periods dramatically reduce premium. Common choices:
| Waiting Period | Premium Impact | Best For |
|---|---|---|
| 4 weeks | ~20% more expensive than 8 weeks | Minimal savings buffer |
| 8 weeks | Baseline (industry standard) | Moderate savings, short sick leave |
| 13 weeks | ~18% cheaper than 8 weeks | 2-3 months emergency savings |
| 26 weeks | ~35% cheaper | 6 months emergency savings |
| 52 weeks | ~50% cheaper | 12+ months savings, partner income |
Consider that most employees get 10 days annual sick leave under the Holidays Act 2003. Employer sick leave balances can usually cover only the first few weeks.
Benefit period is the maximum duration of monthly payments once a claim is accepted:
Indemnity (Loss of Earnings): Benefit is based on actual mortgage at claim time. Premiums are generally tax-deductible under IRD rules. Benefit is taxable as income. Cheaper but benefit amount is not locked in.
Agreed Value: Benefit is locked in at policy start, regardless of future mortgage changes. Premiums are NOT tax-deductible. Benefit is tax-free. About 25% more expensive but provides certainty.
For most salaried employees with stable income and a fixed mortgage, indemnity is more cost-effective. Self-employed with fluctuating income often prefer agreed value.
Many NZ mortgage protection policies offer optional redundancy cover. Typical terms:
Tax treatment depends on the cover type chosen:
For individuals on the 30% or 33% marginal tax rate, the tax deduction on indemnity premiums often outweighs the higher after-tax value of agreed value benefits. Run the numbers with your accountant.
Mortgage protection insurance is a life insurance product regulated in New Zealand by:
Duty of utmost good faith applies: full disclosure of material health and lifestyle facts at application is required. Non-disclosure can void a claim.
Sources: AIA NZ MIRC product disclosure statement, Chubb Life Mortgage Repayment Cover brochure, Fidelity Life Income Cover, Partners Life and Asteron Life policy wordings. Stats NZ Household Disability Survey 2023 (released 27 February 2025). ACC Earners Levy Regulations 2025. IRD guidance on insurance premium deductibility. Policywise, MoneyHub, QuoteHub NZ market research April 2026.
This calculator provides indicative estimates only based on NZ market research and does not constitute financial or insurance advice. Actual premiums depend on full medical underwriting, occupation, hobbies, family medical history, and insurer-specific factors. Always obtain personalised quotes from multiple insurers or through a qualified financial adviser. Consult your accountant for tax treatment specific to your situation.
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