Category Archives: Protection Insurance

Eleven top tips on choosing mortgage insurance

If you’re a little concerned about how to go about choosing mortgage insurance, you might find the following information points to be useful:

1. it’s worth starting out by realising that there may be several different forms of what collectively might be called mortgage insurance – some of these may be more suitable for your circumstances than others;

2. to make an informed decision, you’ll typically need to have a good look around to familiarise yourself with the various types available – fortunately much of this information may be available online now through insurance sites (e.g. Drewberry mortgage insurance);

3. one of the key questions you may need to think about will be whether or not you wish to cover a single risk (e.g. your premature death before the mortgage is paid off) or several, including things such as redundancy or illness that stops you from working etc;

4. you may also need to ask yourself whether you believe short-term cover of your monthly mortgage payments for a specified period is what you require (this is sometimes called mortgage payment protection insurance) or full mortgage payoff (mortgage life insurance);

5. in practice, your degree of freedom to choose may sometimes be constrained because some mortgage lenders may require, as a condition of lending, that the loan is fully covered by mortgage life insurance – though in most cases they are no longer allowed to insist that you purchase it from them as a condition of advancing your loan;

6. it might not be unusual to find that some property owners with a mortgage may have both forms of what they may call mortgage insurance – to pay off the mortgage in the event of premature death or/and to cover mortgage payments in the event of misfortunes such as sickness or redundancy etc.

7. insurance that covers payments may, as you might expect, bring with it certain conditions – for example, only involuntary redundancy might be covered and not voluntary redundancy, resignations, some forms of dismissal or career breaks etc;

8. in the case of mortgage cover for sickness and critical illness etc, the policy may typically exclude pre-existing medical conditions. In other words, you may not be able to insure yourself against the risks of something that is, in effect, already known to have happened to you;

9. some insurance providers may require that you have a medical in certain circumstances and others may have it as a standard requirement;

10. you might also see a qualifying period with such insurance, before claims may be made. This may be relatively commonplace and is not an indication that you are being singled out;

11. some policies may have upper age limits, though in such cases, you may find that alternatives such as whole of life insurance cover, may be suitable to protect any residual mortgage debt you might have.

Life Insurance: More Affordable Than You Think

Many Australians delay signing up for life insurance. In most cases, they do so because there is a widespread belief that life insurance is unaffordable, and that it isn’t really necessary in the first place. Both of these beliefs are mistaken, and can leave families at risk.

Research conducted on this issue reveals that many Australians have a somewhat conflicting view on the subject. While many people claim that they do not need a life insurance policy, they also self-report that they would undergo a financial struggle if the primary wage earner of the home were to become sick, injured, or die.

The irony is that Australians consider it very important to insure their important pieces of property such as their car and their home. Almost eighty percent of respondents say that car and home insurance are either extremely or very important. At the same time, less than half of respondents consider life insurance to be either extremely or very important.

At the same time, about half of the respondents also said that they would either be unable to cope, or would have difficulty coping, with the financial affects of losing income for a period lasting longer than three months as a result of an injury, disease, or death.

Oddly, the results seem to indicate that people are willing to protect there cars and homes, but they are much less willing to protect the income that they provide to their families. To truly understand whether a life insurance policy makes sense for you, you need to ask yourself if your family would be able to cope financially without your income. If not, life insurance is a necessity.

Most people also drastically overestimate the costs of life insurance. When asked to estimate the costs of life insurance, forty percent of the respondents had no idea what the life insurance premiums cost. Those who were able to provide an estimate ended up guessing that it was between 50 and 65 percent higher than it really was.

In reality, life insurance is actually quite affordable, and the costs are well worth the piece of mind that comes with it. The costs are generally higher for males, and higher for people who are older. Even so, a forty-five year old male who doesn’t smoke and works an administrative job can expect to pay only about $35 each month. At 25, a male can expect to pay only $25. These costs are well within most people’s budget.