First Home Buyer? Your Insurance Checklist
Congratulations, you're buying your first home! Between deposits, lawyers and moving boxes, insurance can feel like one more thing on the list. But your mortgage is likely to be the biggest financial commitment you'll ever make, so it pays to protect it properly.
Your first home insurance checklist
1. House insurance (required by your lender)
Your bank will almost always require house insurance before settlement. AFA specialises in personal cover, so we don't arrange house insurance, but make sure it's sorted early so settlement isn't delayed.
2. Life insurance
If one of you passed away, could the other keep paying the mortgage alone? Life insurance can pay off the loan so your partner and family keep the home. As a rule of thumb, start with your mortgage balance and add any other debts and family needs. Our guide How much life insurance do I need? walks you through it.
3. Mortgage repayment or income protection cover
You're more likely to be off work through illness or injury than to pass away during your working life. Mortgage repayment cover pays a monthly amount to keep up your repayments; income protection replaces a share of your wider income. Read which one is right for you.
4. Trauma insurance
A lump sum if you're diagnosed with a serious illness such as cancer, heart attack or stroke can give you breathing room to recover without falling behind on the mortgage.
5. Total and permanent disability (TPD)
If illness or injury meant you could never work again, TPD cover pays a lump sum that could clear the mortgage.
Timing tip: Apply for personal cover before you settle if you can. Underwriting can take a few weeks, and having cover in place on settlement day means you're protected from the moment the mortgage starts.
Don't overspend on premiums
First home buyers often have a stretched budget. You don't have to insure everything at the highest level. A good adviser will help you prioritise what matters most, for example:
- Using a longer wait period on mortgage or income cover to lower premiums
- Matching life cover to the mortgage, then reducing it as the loan shrinks
- Choosing stepped or level premiums depending on how long you'll hold the cover
Check what you already have
You may already have some cover through work or older policies. Bring them along to your review so nothing is doubled up and there are no gaps.
Buying with someone else?
If you're buying with a partner, friend or family member, make sure each person's share of the mortgage is protected. Think about what would happen to the home if one of you couldn't contribute.
We help first home buyers across New Zealand put sensible cover in place before settlement. Book a free chat and we'll make it simple.
Want a second opinion on your cover? Book a free, no-obligation chat with AFA Insurance. We compare policies from a range of New Zealand insurers and explain your options in plain English. Call 021 985 218 or book online.
This article is general information only and is not personalised financial advice. It doesn't take into account your objectives, financial situation or needs. Policy features, definitions and limits vary between insurers and change over time, so always read the policy wording and talk to an adviser before making a decision. Financial advice is provided by AFA Insurance advisers under the licence of Certainty Financial Advisers Network Limited (FSP677951).