You Insured the House. But Did You Insure the Income Paying for It?

Most homeowners understand one clear risk:
“If the house burns down or floods, the financial loss could be devastating.”

So they insure it.

What’s less discussed – but just as real – is this:

If your income stops, the mortgage doesn’t.

And statistically, the likelihood of being off work due to illness or injury during your working life is significantly higher than your home being destroyed by fire or flood.

Yet many people insure the building… and leave the income completely exposed.

Two Risks. One Outcome.

Let’s compare them plainly.

Fire or flood

• House damaged or destroyed
• Insurance payout repairs or rebuilds
• Mortgage continues as normal

Income stops

• Illness or injury prevents you from working
• No income coming in
• Mortgage repayments still due

In both scenarios, the end risk is the same: losing the home.

The difference is behavioural.
We can see a fire. We can imagine a flood.
We struggle to picture ourselves unable to work.

Why Do People Insure One But Not the Other?

There are a few common reasons:

1. It’s Mandatory vs. Optional

Banks require house insurance.
They do not require income protection or mortgage protection.

When something isn’t required, it often gets postponed.

2. We Underestimate Health Risk

Most people assume:

• “I’m healthy.”
• “It won’t happen to me.”
• “I’ll be back at work quickly.”

But many claims arise from temporary conditions – surgery recovery, back injuries, stress-related illness – not catastrophic events.

3. We Think ACC Covers Everything

In New Zealand, ACC covers accidents.
It does not cover illness.

Cancer. Stroke. Autoimmune disease. Mental health conditions.
These are common causes of extended time off work and they’re not covered by ACC income replacement.

The Real Question: What Is Your Income Worth?

Your home is a capital asset.

But your income is the engine that funds it.

Over a 20–30 year mortgage term, your income will generate millions of dollars. That income:

• Pays the mortgage
• Feeds the family
• Covers school fees
• Funds retirement savings
• Keeps daily life moving

If that engine pauses, everything downstream is affected.

Mortgage protection or income protection is designed to replace a portion of your income if you cannot work due to illness or injury.

It is not about fear.
It is about cashflow continuity.

A Simple Risk Framework

Ask yourself:

• If my house burned down tomorrow, would insurance step in? → Yes.
• If I couldn’t work for six months, what steps in? → Savings? Partner’s income? Nothing?

For many households, the second answer is unclear.

That lack of clarity is the risk.

Why Income Protection May Be More Important

You can rebuild a house.
Rebuilding financial stability is harder.

Without income:

• Savings deplete quickly
• Credit facilities increase
• Financial stress impacts family wellbeing

Protecting income protects optionality.
It buys time.
It protects decision-making under pressure.

In many cases, income protection is not about replacing 100% of earnings – it’s about ensuring the mortgage and essential expenses can continue without forcing drastic lifestyle changes.

Bringing Clarity to the Conversation

This is not about selling insurance products.
It’s about aligning risk exposure with financial reality.

If you are carrying a mortgage, you are leveraged.
If you are leveraged, your income is your primary risk control.

Insuring the house but not the income paying for it creates an imbalance.

The core question is simple:

If your income stopped tomorrow, how long could you hold your home?

If the answer is uncertain, it’s worth reviewing your position.

Because the risk of losing your home due to income loss is not theoretical.

It is just less visible than fire or flood.

And visibility does not equal probability.

Final Thought

Most people insure what they can see.

Financial resilience requires protecting what you can’t see – the income that makes everything else possible.

If you have never reviewed your income protection or mortgage protection cover, it may be time to bring clarity to that gap.

Your home depends on it.

For a simple breakdown, watch this short video by our in-house Insurance Adviser, Royce Pritchard, where he explains why income protection matters and how it works in real terms.

If you’re unsure whether you’re covered or if your current cover is structured correctly – get in touch with us.

Our advice is free, and a short conversation can make a significant difference.