MORTGAGE PROTECTION

April 7th, 2017 Posted by Risk Articles No Comment yet

When is a Mortgage Protection Policy NOT a Mortgage Protection Policy?

When you took out your home loan or mortgage with the bank some years ago, did they encourage you to have some mortgage protection insurance, so that if something happens to you (or your spouse) your mortgage could be repaid? This often happens, and it seems sincere and convenient to complete the appropriate forms while you are tidying up the last bits and pieces with your mortgage. It gets the whole thing over and done with all at once. Right?

Maybe! But are you certain you know what type of insurance you have bought?

Banks often call these insurance policies mortgage protection insurance, when in fact, they may only be a Life Insurance policy. It only repays your mortgage in the event of your death, not if you are disabled and can’t work. Then there are other bank Mortgage Protection polices which DO in fact, repay your mortgage repayments, if you are unable to work due to any illness or injury, but only for a maximum of two years! How do you pay your mortgage after two years, if you are still unable to work? Also, is the amount you can claim just enough to pay your mortgage repayments? If so, how would you pay your other financial commitments; food, power, water, medicines, etc?

Mortgage Protection policies provided by Life Insurance companies through Registered Financial Advisers have undergone some radical product enhancements in recent years and some policies will continue paying right through to age 65, even if your mortgage has already been paid in full (providing you are still disabled)! If your mortgage protection policy is with your bank, it may not cover all the things you think it covers. It may pay out much less in the event of a claim, and it may be much more expensive than comparable cover recommended by a Registered Financial Adviser. They can help choose the right product to meet your specific needs from a range of insurance company products.

If you want a review of your existing Mortgage Protection provisions, or want advice regarding Income Protection insurance, which would take all of your financial commitments into consideration, then please contact us for an appointment by emailing action@advicefinancial.co.nz

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