What Is Mortgage Protection Cover?
Mortgage Protection Insurance is a type of cover that provides regular payments to help you meet your mortgage if you’re unable to work due to illness or injury. The goal is simple: to keep your home secure while you recover, even if your income suddenly stops.
Depending on your policy you’ll typically receive a set monthly amount. This will be either a fixed figure or a percentage of your regular income. You will usually get this amount until you're able to return to work or for a set benefit period (like two years or up to age 65).
What Does ACC Provide?
The Accident Compensation Corporation (ACC) is New Zealand’s no-fault accident insurance scheme. It covers most residents and visitors who are injured in an accident. If you're hurt and can’t work ACC can cover treatment costs and pay up to 80% of your income while you recover.
ACC only covers accidental injuries and not illness, medical conditions or non-accident-related mental health issues. So if you're unable to work because of a back injury from a fall ACC may help. If you're off work due to cancer or chronic fatigue ACC won’t help.
What Happens if You’re Eligible for Both?
If you have Mortgage Protection Cover and suffer an injury that qualifies for ACC support your ACC payment usually comes first. Most insurance policies include an ‘offset’ clause. This means your insurer will deduct your ACC compensation from your insurance benefit to avoid double payment.
Here’s an example:
Your Mortgage Protection policy pays $3,000 per month
ACC pays you $2,500 per month for an accident-related injury
Your insurance may only pay the remaining $500 per month or possibly nothing, depending on the policy wording
It’s not that you’re missing out rather insurers coordinate with ACC to avoid overcompensation. This helps keep premiums affordable for everyone.
When Does Mortgage Protection Really Step in?
There are a few key scenarios where Mortgage Protection becomes the primary support:
1. You’re off work due to illness
ACC won’t pay for non-accident-related health conditions like cancer, arthritis or mental illness. If your mortgage protection policy includes illness cover this is where it shines. It provides a regular income while you recover.
2. Your ACC payment is lower than your insured amount
If ACC only covers part of your income (for example, because you were part-time, self-employed or recently changed jobs) your insurance may top up the difference. This will depend on your policy structure.
3. You have an agreed-value policy
Some policies pay a fixed amount regardless of what ACC pays. These are less common and may cost more but they ensure a more predictable benefit during recovery.
Understanding Offsets and Policy Wording
Every Mortgage Protection policy is slightly different. Some policies offset dollar for dollar, meaning every cent you receive from ACC reduces your insurance payout. Others only offset above a certain threshold. And some agreed-value policies do not offset at all.
That’s why it’s important to understand your own policy wording, or better yet, work with an adviser who can explain how your cover behaves in different situations.
Should You Still Get Mortgage Protection if You Have ACC?
Yes, because ACC doesn’t cover everything. It’s designed for accidental injuries only. This means a huge range of illnesses and health events are excluded. Mortgage Protection provides broader protection especially for unexpected illnesses that stop you working for weeks, months, or longer.
It’s also worth remembering that ACC payments may take time to process and there can be disputes over eligibility. Having an insurance policy in place can provide backup if there are delays or gaps.
A Stronger Safety Net With Both in Place
Together ACC and Mortgage Protection form a more complete safety net. ACC may take the lead for accidents but Mortgage Protection fills the gaps, especially when illness is involved or when ACC’s support doesn’t meet your full needs.
The key is to make sure your policy is set up properly with the right waiting periods, benefit amounts and understanding of how any ACC offsets apply. That way you can feel confident your mortgage is protected, no matter what life throws your way.
It’s not about choosing one over the other, it’s about making sure all your bases are covered.