What Happens to Your Mortgage if You Can’t Work or Pass Away? A Real New Zealand Family Story
Most people with a mortgage believe one thing deep down:
"If something serious happened, we'd find a way to cope."
But when life changes in a single moment, coping becomes much harder than expected - especially when income stops, the home no longer fits your needs, and the mortgage doesn't slow down.
To understand why planning matters, let's look at a realistic New Zealand family situation.
Meet the Patel Family
Meet Ravi and Anika Patel.
- Ravi (42) works as a truck driver, earning a strong, reliable income
- Anika (39) works part-time in retail, earning below the median wage
- They have two school-aged children
- They own a family home with a $800,000 mortgage
Their lifestyle works because Ravi's income supports most of the household costs - the mortgage, school expenses, transport, and savings for the future.
Like many families, they never imagined how quickly that stability could disappear.
The Accident That Changed Everything
One evening, while driving long-haul, Ravi was involved in a serious road accident.
He survived - but the injuries were life-altering.
Ravi lost both of his legs and was left permanently disabled.
He could no longer work as a truck driver, and returning to any physically demanding job was no longer possible.
In a matter of seconds:
- Ravi's income stopped
- Their mortgage remained
- Their home was no longer suitable for his mobility needs
- The future they planned suddenly felt uncertain
This is where Total and Permanent Disability (TPD) insurance made all the difference.
How TPD Insurance Helped the Patel Family
TPD insurance pays a lump sum if you become totally and permanently disabled and can no longer work again.
For Ravi, this payout didn't solve everything - but it created options when they needed them most.
The TPD payout allowed the Patel family to:
Renovate Their Home for Accessibility
Their house was never designed for wheelchair use.
The payout helped fund:
- Wheelchair ramps
- Wider doorways
- Bathroom modifications
- Accessible kitchen layouts
Without these changes, Ravi would have struggled to move safely and independently in his own home.
Reduce Mortgage Pressure
A portion of the TPD payout was used to reduce their mortgage, lowering monthly repayments.
This gave Anika:
- Time to adjust her work hours
- Less pressure to suddenly earn more
- Stability while the family adapted to a new reality
Cover Medical, Rehabilitation, and Lifestyle Costs
Beyond ACC support, there were costs people don't always anticipate:
- Ongoing rehabilitation
- Mobility equipment
- Transport adjustments
- Lifestyle changes to support daily independence
The TPD payout gave the family flexibility - without draining savings or relying on debt.
Why Income Protection Alone Would Not Have Been Enough
Many people assume income protection insurance would cover a situation like this.
But income protection:
- Replaces part of income temporarily
- Usually doesn't last forever
- Doesn't fund major home renovations
TPD insurance exists for permanent, life-altering situations - where work is no longer an option at all.
For Ravi, TPD insurance provided long-term certainty, not short-term relief.
What About Life Insurance?
Now let's consider a different outcome.
If Ravi had not survived the accident, the financial challenge would have been different - but no less serious.
This is where life insurance plays its role.
How Life Insurance Would Have Helped if Ravi Had Passed Away
If Ravi had died in the accident, life insurance could have paid a lump sum to Anika and the children.
That payout could have been used to:
- Pay off or significantly reduce the $800,000 mortgage
- Remove immediate financial pressure
- Allow Anika to focus on her children rather than financial survival
- Prevent the need to sell the family home
Life insurance doesn't remove grief - but it removes financial panic during the hardest moments.
Why These Covers Are Often Overlooked
Families like the Patels often delay insurance because:
- Life feels busy but stable
- Health feels "good enough"
- Planning feels uncomfortable
But accidents don't check whether plans are finished.
The difference between families who struggle financially and those who adapt with dignity often comes down to whether protection was in place beforehand.
The Bigger Picture: Planning Is About Dignity, Not Fear
TPD insurance protects:
- Independence
- Long-term living standards
- The ability to adapt when life changes permanently
Life insurance protects:
- The home
- The family's future
- Financial stability when income is lost forever
Together, they don't predict disaster - they protect progress.
Final Thought
No one takes out a mortgage expecting life to change overnight.
But responsible planning means understanding what would happen if it did.
At Axis Finance, we help families structure protection so that if life takes an unexpected turn, decisions can be made calmly - not in crisis.
Disclaimer: This information is general in nature and does not take into account your personal financial situation, needs, or objectives. Personalised advice should be sought before making any financial decisions.
