Insurance Questions Every Mortgage Broker Should Raise

Key Takeaway

Australian borrowers should expect mortgage brokers to prompt key insurance discussions, even if they do not sell policies. With over 30% of owners now in mortgage stress according to Roy Morgan, cover for death, disability, income loss and business risk becomes critical risk management alongside buffers and loan structure. The article outlines specific questions to ask about life, TPD, trauma and income protection relative to debt, dependants and cash reserves, and recommends coordinating policies with loan structures, wills and offsets for practical protection.

Your broker should absolutely be raising insurance and risk questions, even if they never earn a cent from a policy. Their job is to help you keep the property and business you’re borrowing for, not just to get the loan approved.

Here’s what you should expect them to cover, and the decisions you can make this week.

Risk planning checklist with loan and insurance documents A simple one-page risk plan keeps your mortgage, buffers and insurance aligned.

Why risk cover matters more in 2026

Roy Morgan’s July 2026 research shows about one‑third of Australian owner‑occupiers are now in mortgage stress, with repayments eating a big chunk of after‑tax income.

Layer in the APRA 3% serviceability buffer and higher living costs (ABS Living Cost Indexes, June 2026), and it’s clear: if income drops suddenly, many households have very little room for error.

Insurance is just one part of the plan, alongside buffers, offsets and loan structure. But it’s the part that can drop a six‑ or seven‑figure lump sum into your world when you need it most.

1. The five “what ifs” your broker should test

A switched‑on broker will walk you through five core shocks:

Death
Permanent disability
Serious illness
Temporary income loss (job loss, contract gap, maternity/paternity leave)
Business failure or legal claim

For each, they should help you answer three simple questions:

What bills still need to be paid? (home loan, investment loans, rent, business loans, school fees)
What income would disappear?
What safety nets already exist? (super insurance, sick leave, workers comp, family help, cash buffers)

They don’t need to recommend a specific insurer. But they should make sure you’ve thought about the gap.

Quick worked example

Couple with two kids, combined after‑tax income: $12,000 per month
Home loan: $1.1m, P&I, repayments: ~$6,400 per month at 6%
Offset and savings: $40,000

If one income of $7,000 per month disappears, repayments alone jump from ~53% to ~91% of the remaining income. That’s not sustainable, even before food and bills.

Your broker should flag that you either need:

More cover (life, TPD, income protection), and/or
Bigger buffers, smaller loan, or cheaper property.

2. Life cover sized around your mortgage (not just a rule of thumb)

Too many people pick a random life cover amount. Your broker can’t tell you which policy, but they can help size the problem. Key questions they should raise: - If one of you dies, is the plan to keep the home, sell it, or downsize? - How much debt must be cleared so the survivor isn’t under forced‑sale pressure? - How long do you want school fees and basic living costs covered? A common starting point is: - Home loan balance (e.g. $900k) - Plus 1–3 years of core living…

Frequently asked questions

Does my broker have to talk about insurance if they don’t sell it?▾

They should. Even if your broker is not licensed to recommend specific insurance products, part of good credit advice is testing how you would keep the loan if income stops or a major health event hits. They can map the risk, show the size of the gap and suggest you speak to a licensed adviser or review cover in your super.

How much life insurance should I have for my mortgage?▾

A common starting point is enough to clear your home loan plus one to three years of core living costs, then subtract any existing cover in super or savings. The exact figure depends on your dependants, other assets and whether your partner could or would keep working. Your broker can help size the debt side, then you confirm cover levels with an insurance adviser.

Do self-employed borrowers need more insurance than PAYG employees?▾

Usually they need either more insurance or bigger cash buffers. Self-employed income is often lumpier and less protected by sick leave or employer policies, so a long illness or contract loss can hit harder. Many planners suggest self-employed borrowers hold at least 6–12 months of total living costs and repayments in cash or offset, and strongly consider income protection.

Speak with a specialist advisor

Confidential consultation, bespoke advice for your situation.

The Insurance Questions Your Broker Should Raise About Your Loans