According to Stats NZ, unemployment has increased to more than 5% as of June 2025. This has made job security a serious concern for a growing number of Kiwis.
If you are a full-time employee, getting redundancy cover can help ensure you can keep up with your mortgage repayments in case you are made redundant.
What is Redundancy Cover?
Redundancy cover is designed to protect your income if you lose your job due to involuntary redundancy, which can occur through events such as your company downsizing, restructuring, or closing
Just like a salary, it provides a monthly payout for a set period (usually up to 6 months). This gives you much-needed breathing room, as it allows you to comfortably keep up with your mortgage or rent payments while you look for your next job.
In short, with redundancy cover, you won’t have to worry about burning through your savings or going through WINZ’s now stricter application processes to get job seeker support.
What’s the difference between Redundancy Cover, Income Protection, and Mortgage Protection?
It can be easy to confuse redundancy cover with income protection and mortgage protection, and understandably so – these three policies can help you keep up with your mortgage payments in case you lose your job. However, there are key differences between these three insurance policies:
Income Protection and Mortgage Protection VS Redundancy Insurance
Mortgage protection and income protection only apply if you are unable to work due to sickness or injury. These do not apply when you lose your job due to redundancy and therefore have nothing to do with job security.
How Does Redundancy Cover Work?
As mentioned earlier, redundancy cover pays you a monthly benefit of up to 6 months in case you are made involuntarily redundant. This helps you comfortably look for your next job without worrying about your mortgage, rent, and other expenses.
There are a few important things to note:
- Maximum claim limit: You can only receive payouts for a maximum of 6 months.
- Stand-down period: Redundancy cover usually has a 6-month stand-down period. This means you need to have this policy in place for a minimum of six months before you can make a claim.
- Waiting period before payment: Once you have your redundancy claim approved, there is generally a 4-week waiting period before you receive your first payment.
As a final note, redundancy insurance is meant to support you through the transition period of finding a new job. It is not intended to replace your full-time income.
Who Can Benefit from Redundancy Cover?
In general, as long as you are a full-time employee, redundancy cover can give you the financial safety net you need to keep up with your expenses in case you are made involuntarily redundant. This can be especially helpful for:
- Homeowners who want the peace of mind of having their mortgage payments taken care of in case they lose their job
- Families who rely on a single income earner or are on a tight budget
- Anyone who wants an additional financial buffer on top of their general savings
Final Thoughts: Protect Your Income and Have Peace of Mind
If you are suddenly made redundant tomorrow, how long can your savings keep up with your current expenses?
If the answer makes you uneasy, it may be worth considering getting redundancy insurance. Doing so can give you the confidence you need to focus on what you need to do in case you are made redundant: finding your next job.
Let’s Chat!
If you are interested in learning more about redundancy cover and whether it’s right for you, schedule a free insurance review by filling out the form below.
Our licensed insurance adviser will give you insurance recommendations and advice in plain language through our free insurance review session.
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