Insurance protection for your home loan

We don’t offer mortgage protection insurance. However, we do offer Comprehensive Life Insurance plans which can help your loved ones pay off debt when you pass away. This would include paying your outstanding home loan amount. We also offer additional cover you can add to your Life Cover that will financially protect you and your family if you’re ever diagnosed with a dread disease or become permanently disabled.

With a Life Insurance policy, the premiums increase as you age because your risk increases. Mortgage protection insurance premiums, on the other hand, usually decrease as you age. That’s because the amount you owe on your home loan decreases. So, if you’re still paying for this cover in 20 years’ time when you’ve paid off your bond, your last installment should be less than what your very first one was.

Advantages

• Your premiums will likely decrease the more you pay off your home loan.
• You can often take out this kind of cover without any lengthy medical exams.
• You don’t need to worry about nominating a beneficiary – most of these policies pay directly to the bank that holds your home loan.

Disadvantages

• Your family can only pay off this one debt with this policy – it doesn’t cover any other debts.
• Even though your monthly premiums may decrease, this type of cover can be costly. It could be more cost-effective to take out or increase your life cover.
• If you move house and take out a new bond, you’re essentially starting over with a new policy.

Mortgage protection insurance might not be right for everyone. But some type of insurance, whether that’s home loan protection or life insurance, is necessary for anyone with a bond and people who depend on them financially.

Mortgage protection insurance isn’t a legal requirement, and neither is life insurance if you own a home. However, many banks will insist or at least strongly recommend you take out a policy that will pay off your bond if you pass away or become permanently disabled. This is in the interests of the bank and your family:

• The bank doesn’t want the admin of having to repossess your house nor does it want to kick your loved ones out.
• Your loved ones will need a roof over their heads and you don’t want them worrying about what will happen to their home at an already difficult time.

This entirely depends on you and your circumstances. If the only major debt you have is your home, a mortgage protection policy could be right for you.

Having said that, you may accumulate more debt as you age, in which case a life insurance policy could be better. Also consider that the earlier you take out life insurance, the lower your premiums will be. Getting life cover later in life is going to result in very costly premiums. So consider simply taking out enough life cover from the get-go.