‘Do I need personal insurance as a first-home buyer?’ If you’re in the market for a home or have recently bought one, this question may be circling around in your mind.

Unlike home insurance, life insurance is not a mandatory requirement for getting a mortgage. But, because the mortgage itself is a big financial commitment, protecting your ability to repay it is more than just a good idea.

So, read on for some key things to think about, according to our SHARE advisers.

It’s a milestone worth protecting

With high house prices, strict lending requirements and the rising cost of living, buying a house in New Zealand can be a challenging journey. So, protecting this great achievement makes a lot of sense.

There are two sides to this. On the one hand, there’s house insurance, which is designed to protect you from the financial consequences of loss or unintentional damage to your property. On the other, there’s personal insurance, which can help you protect your home ownership by securing your ability to meet the mortgage repayments, no matter what life throws your way.

So, let’s take a closer look at some scenarios and how certain types of cover can assist you.

What would happen if your income stopped?

If your family relies on your income to repay the mortgage, then having a financial safety net against the unexpected is crucial.

Of course, no one likes to ponder over what could happen if you fell seriously ill or were no longer around, but those are the kind of risks that can impact your family’s financial future.

For example, many people take out life insurance to cover at least the mortgage amount, so that the remaining partner is not left with mortgage repayments they can’t afford. Others also add to the mix income protection or mortgage protection, both of which are designed to provide financial support if you can’t work due to a serious illness or injury. Claim payments are made after your selected wait period ends and stop when you return to work or at the end of the benefit period.

Another flexible and powerful tool: trauma insurance

So far, we’ve talked about how to protect your mortgage repayments if your family can no longer rely on your income. But there’s another scenario to consider: how would your finances be affected if you experienced a serious medical event/condition, regardless of whether you could still work?

Trauma insurance (or ‘critical illness cover’) is often referred to as a living benefit. In a nutshell, it pays out a lump sum if you’re suffer or are diagnosed with one of the serious conditions listed in the policy, which usually include things like heart attacks, strokes, and cancer.

Most importantly, you and your family can use the lump-sum amount as you see fit, depending on your needs. For example, this payment may allow you to take time off work while you focus on your recovery, and still be able to meet the mortgage payments.

You can structure this flexible and powerful tool either as standalone cover or as an add-on to life insurance. Get in touch to learn more.

What may you need?

There can be many good reasons to consider personal insurance – and buying a house is certainly one of them. But with different options available to choose from, you may be wondering which are most appropriate for your circumstances.

Our SHARE advisers are here to answer any questions you may have, so please don’t hesitate to contact us: you can click here to find a SHARE adviser near you.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.