Private Health


Money Smart


Mortgage Insurance

Do you have a mortgage for your property or car? I know I do. Most of the time the reason you were offered the mortgage by the bank is because they believed your current income and assets will be able to let you repay the debts. Factors such as your income, lifestyle, and the asset or property you are buying with the loaned money will have been taken into account.

There is always the question to what if you suddenly became very ill and unable to work? Will you have the money to continue to pay your debts? Will your family?

The three most feared circumstances are:

  • Death

  • Total permanent disability A disability in which you cannot work for the rest of your life.

  • Temporary disablement - A period of time in which you are recovering from an injury and cannot work.

  • Involuntary redundancy- Involuntary unemployment in which you will need to quit your job.

Even this is something I cannot answer. But fortunately, with the help of Mortgage Insurance you will be able to rest assure.

Mortgage Insurance is usually offered under Life Insurance and Income Protection. If you ever miss your payment, you are typically covered for 30 days. But this only applies if you have genuinely been unfit to work. You cannot get a claim if you suddenly decide to not work because you did not like the work atmosphere, or simply you are too lazy.

Unlike CTP and Greenslips, getting a Mortgage Insurance policy is not compulsory. But if you are taking out a big loan, the only income earner in the house, or if you are only able to repay it with your current job when your salary is the highest it has ever been, I recommend you consider taking one out. This is because if a sudden decline of income affected you, this will to trouble to your mortgage as well.

The period of when a Mortgage Insurance can include is between a year and five years. If you are anticipating repaying your debts after a longer time, you will need to extend the period by paying an extra cost to the insurer.

One of the things that people always ask me is regarding the cost of such insurance policies. Most of the time, the premium is determined by the amount of money you are borrowing, and your currently lifestyle. You can expect it to cost a few dollars a day, or a bit more depending on whatever your case may be.

Before you apply for a Mortgage Insurance, make sure you have read through the Product of Disclosure. There may be some conditions, such as your loan contract must not exceed a certain amount. For some companies, this is $750,000. The age and nationality of citizenship will also apply.

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