When one wage services the mortgage, the household has no second income to fall back on. Here is how to think about life and income cover on a single income, why the at-home partner still matters, and the ACC illness gap to plan for.
In a lot of New Zealand homes, one person earns and the other looks after the children or the household, at least for a few years. It is a sensible arrangement, but it changes the maths of insurance. With one wage servicing the mortgage, there is no second income to lean on if the earner stops working. That single point of failure is what protection planning is really about for these households.
This article walks through how to think about cover when one income carries the house: which covers matter most, why the at-home partner is rarely "no risk", how people size life and income cover on one wage, and the illness gap in ACC that single-income homes especially need to plan around.
TL;DR: how do you protect a mortgage on a single income?
TL;DR: On a single income, the mortgage depends entirely on one person's ability to earn. The two covers that do the heavy lifting are life cover (to clear or reduce the loan if the earner dies) and income protection (to replace the wage if they cannot work). The catch most people miss: ACC pays nothing for illness, only accidents — and only about 35% of NZ adults hold any life insurance 15.
The headline risk is concentration. A two-income household that loses one wage is stretched; a one-income household that loses its only wage has nothing coming in. The covers below are about turning that single point of failure into something a household can survive.
Why is a single-income mortgage higher risk?
It is not that the borrowers are riskier people. It is that the structure removes the backstop.
In a two-income home, if one earner is off work for a few months through illness or injury, the other wage keeps the lights on and usually keeps the mortgage moving, even if things are tight. In a single-income home there is no second wage to absorb the shock. If the one income stops, the mortgage payment, the rates, the insurance and the groceries all still arrive on schedule.
Three things make the single-income mortgage a sharper exposure:
- No internal fallback. The household cannot "live on the other income" because there isn't one.
- A larger loan relative to one wage. Many single-income households borrow against the earning partner's income alone, so the loan is large in proportion to the income that services it.
- A dependent partner and often children. The people relying on that income usually cannot quickly step in to replace it.
None of this is a reason not to buy a home on one income. It is a reason to be deliberate about what happens if that income stops.
What happens to the loan if the sole earner can't work?
The mortgage does not pause because the income did. The bank still expects the scheduled payment.
What a household actually has to fall back on, in rough order, is usually: sick leave (a few weeks at most), annual leave, any emergency savings, then ACC weekly compensation if the cause was an accident, and finally any private insurance that was set up in advance. For a single-income home with a mortgage, those first buffers run down quickly, and the ACC step has a large hole in it that we cover further down.
If the earner dies, the picture is starker. The income stops permanently, and unless there is life cover or substantial savings, the surviving partner is left servicing a mortgage on no income, often while caring for children. Yet research from the Financial Services Council found only about 35% of New Zealand adults hold any form of life insurance 5. A single-income mortgage household with no life cover has no payout to clear the loan if the earner dies — the very situation where it matters most.
Which covers matter most when one income carries the house?
There is no single "right" stack, and the order depends on the household. But on a single income, two covers tend to do the most work, with a third worth weighing up.
| Cover | What it does | Why it matters on one income |
|---|---|---|
| Life cover | Pays a lump sum if the insured person dies (some also pay on terminal illness) | Can clear or reduce the mortgage so the surviving partner is not servicing a loan on no income |
| Income protection | Replaces a portion of income (typically up to ~75%) if the earner can't work through illness or injury, for a chosen benefit period 4 | Keeps the mortgage and household running while the earner is off — and, unlike ACC, covers illness |
| Trauma / critical illness | Pays a lump sum on diagnosis of a defined serious condition (e.g. cancer, heart attack, stroke) | Useful for one-off costs and a buffer in the early weeks, before any income protection wait period ends |
Income protection is the one most single-income homes underuse. Earlier FSC research found only about 11% of respondents held income protection cover 6, which means most single-income households have nothing in place to replace the wage that pays the mortgage if illness strikes. Whether income protection or a mortgage-specific cover fits better is its own decision, and we work through the trade-offs in income protection or mortgage protection for your home.
For the order to put these in when you're taking on a new loan, see which cover to sort first on a new mortgage.
Should the non-earning partner be insured too?
This is the part single-income households most often get wrong, because the at-home partner has "no income to replace." That framing misses the cost they are quietly carrying.
The partner at home is usually doing the childcare and running the household. If that partner dies or becomes seriously unwell, the earner does not simply carry on. Someone has to pay for childcare, after-school care, school holidays, cleaning, and the dozens of jobs that were being done for free. That replacement cost is real and ongoing, and it lands on a household that still has a mortgage and now only one parent available 8.
In practice that can mean the earner reducing their hours (cutting the very income the mortgage relies on) or paying for help out of one wage. So insuring the at-home partner is not about replacing a salary — it is about funding the replacement cost of the unpaid work, and giving the surviving earner room to grieve, adjust hours, or buy in help without the mortgage falling over.
It does not have to be a large amount of cover, and it should be sized to the actual cost of the help a household would need, not plucked from the air. But "they don't earn, so they don't need cover" is rarely the right conclusion for a household with young children and a mortgage. Our guide to life cover for parents goes into how families think about this on both sides.
How do you size life and income cover on one wage?
Sizing is where personalised advice earns its keep, because it depends on your numbers. But it helps to understand the building blocks.
Life cover on a single income is often built up from the things the lump sum needs to do, for example:
- clearing or reducing the mortgage so the home is secure;
- clearing other debts (car, personal loans, credit cards);
- providing a sum to replace some of the lost income for a period while the family adjusts;
- a buffer for childcare and immediate costs.
Income protection is sized differently. It replaces a percentage of income rather than a lump sum, typically up to around 75% of pre-disability income 4, and you choose two key levers: the wait period (how long after stopping work before payments begin — longer waits mean lower premiums, but you need savings or leave to bridge the gap) and the benefit period (how long payments continue — to age 65, or a shorter term). On a single income, the wait period has to be honest about how little buffer the household really has.
A few reference points are worth keeping in mind when you model this. ACC, where it applies, pays 80% of pre-injury earnings up to a maximum, with a floor for full-time earners of $752.00 gross a week 23 — well below what most mortgages need. And NZ Superannuation is not a working-age safety net: it does not start until 65, with the single-living-alone rate at $1,110.30 a fortnight after tax 7. None of those replace a mortgage-servicing wage for a working-age single earner.
The right numbers depend on your loan, your income, your other cover and your family. The point here is the method, not a figure to copy.
How does ACC's accident-only limit hurt single-income homes?
This is the gap that catches single-income mortgage households hardest, so it is worth being clear about.
ACC only provides loss-of-earnings cover for injuries caused by accidents — not illness 1. A sole earner who is too sick to work, through cancer, a heart condition or a mental-health illness, gets no ACC weekly compensation at all. For a household with two incomes that is serious; for a household where one wage carries the mortgage, it is the difference between coping and not.
Even where ACC does apply, it has a ceiling. It pays 80% of pre-injury gross earnings up to a maximum gross weekly payment of $2,418.55 (from 1 July 2025) 2. Earnings above that cap are not replaced, and the gap still has to service the mortgage on one income. There is a floor too — a minimum of $752.00 gross a week for full-time earners — but that is well below a typical mortgage-servicing income 3.
Income protection is built to cover what ACC does not. Private cover replaces up to around 75% of income and, crucially, pays out for illness as well as injury 4. For a single-income home, that illness cover is the whole point: it closes the gap ACC leaves open precisely where the household has no second wage to fall back on. We unpack this gap in more detail in why ACC is not income protection.
What's a sensible cover stack on a single income?
There is no universal answer, but the figure below shows the shape many single-income mortgage households end up considering: a stack of cover on the sole earner, plus a smaller, replacement-cost layer on the at-home partner.
Figure: single-income household — where the cover needs to sit
| Layer | On whom | What it is doing |
|---|---|---|
| Life cover | Sole earner | Clears/reduces the mortgage and debts if they die |
| Income protection | Sole earner | Replaces the wage if illness or injury stops work (covers the ACC illness gap) |
| Trauma / critical illness | Sole earner | Lump sum on diagnosis; bridges the early weeks and one-off costs |
| Replacement-cost cover | At-home partner | Funds childcare and household help if that partner dies or is disabled |
Source: FSC research on cover uptake and replacement of income 456; ACC weekly compensation rules 123; at-home replacement-cost concept via Sorted 8. Illustration of a common structure, not a recommendation — your stack should be sized to your loan, income and family.
The way these layers are weighted, and where you start, depends entirely on the household: the size of the mortgage, the earner's job, how much can be self-insured through savings, and what is already in place. The value of working with an adviser here is getting the layers sized and ordered to your situation, and comparing cover across insurers such as Partners Life, AIA, Fidelity Life, Asteron Life and Chubb on both price and policy definitions, rather than guessing.
Frequently asked questions
Does ACC cover a sole earner who gets sick and can't work? No. ACC's weekly compensation is for incapacity caused by accidents, not illness 1. A single earner who cannot work because of cancer, a heart condition or a mental-health illness receives no ACC weekly compensation, which is why income protection — which covers illness as well as injury — matters so much for single-income homes 4.
Should we insure the partner who stays at home with the kids? It is worth considering. Even with no salary to replace, an at-home partner carries a real replacement cost in childcare and household labour. If that partner died or became disabled, the earner may have to pay for help or cut their hours, adding pressure to a mortgage that already runs on one income 8. Cover is usually sized to that replacement cost rather than to a wage.
How much life cover do you need on a single income? There is no set figure — it depends on your mortgage, other debts, how long you'd want to replace income for, and childcare costs. Many people build it up from clearing the loan, clearing other debt, and a buffer for the family to adjust. The right amount is best worked out against your own numbers with an adviser, as general figures rarely fit a specific household.
Is income protection or mortgage protection better for a single-income home? They do different jobs. Income protection replaces a share of your income (up to ~75%) for illness or injury, while mortgage protection focuses on covering the loan repayments. Which fits depends on your loan and budget; we compare them in income protection or mortgage protection for your home.
Will NZ Super help if the earner can't work? Not for a working-age household. NZ Super does not begin until age 65 — the single-living-alone rate is $1,110.30 a fortnight after tax 7 — so it is not a safety net for a sole earner in their working years. Cover has to bridge the years before retirement.
This article is general information only and is not personalised financial advice. It does not take into account your particular financial situation, goals or needs. Before acting, consider whether it's right for you and seek advice tailored to your circumstances. Whether a claim is paid depends on the terms, conditions, exclusions, stand-down periods and underwriting of the specific policy, and on your disclosure — this is a summary only, so always read the policy wording. We're generally paid by commission from the insurer when you take out a policy through us; this doesn't change the premium you pay, and we manage any conflicts of interest in line with our duty to prioritise your interests. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority and is a member of the Financial Dispute Resolution Service (FDRS). Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Figures correct as at 17 October 2025. Last reviewed 17 October 2025.
Sources
- 1.Accident Compensation Corporation (ACC) — Weekly compensation (ACC covers loss of earnings for accidents only, not illness; 80% of pre-injury earnings), as at 17 October 2025.
- 2.ACC — Weekly compensation (maximum gross weekly compensation $2,418.55, effective 1 July 2025), as at 17 October 2025.
- 3.ACC — Weekly compensation (minimum $752.00 gross per week for full-time earners, 80% of the adult minimum wage of $23.50/hour, effective 1 April 2025), as at 17 October 2025.
- 4.Financial Services Council (FSC) — Income protection replaces up to around 75% of pre-disability income and, unlike ACC, covers illness as well as injury (industry standard), as at 17 October 2025.
- 5.Financial Services Council (FSC) — Money & You: Valuing Belongings Over Ourselves (about 35% of NZ adults hold any form of life insurance), published July 2025.
- 6.Financial Services Council (FSC) — Money & You: Taking Cover, media release (about 11% of respondents held income protection cover), published 1 December 2022.
- 7.Work and Income — How much you can get for NZ Superannuation (single, living alone, after tax M code: $1,110.30 per fortnight; couple both qualify: $854.08 per fortnight each), rates effective 1 April 2025.
- 8.Sorted / Te Ara Ahunga Ora Retirement Commission — The replacement cost of unpaid household and childcare work, as at 17 October 2025.
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