Mortgage Protection Insurance

Mortgage Protection Insurance is a simplified life insurance product which is designed to pay off a fixed amount of money owing on a mortgage in the unfortunate event of a serious illness or death of the borrower.

This product is available on residential and commercial properties owned by individuals as a primary home or as an investment property. The benefit paid from Mortgage Protection can be used exclusively to cover your outstanding mortgage debt.

The use of mortgage protection insurance

Depending on your circumstances and number of dependants you can organise a mortgage protection policy to provide cover for a range of situations:

  • Life - in the event of your death, the outstanding balance of your loan will be paid in full.
  • Disability - if you are unable to work due to illness or injury your monthly repayments will be paid.
  • Involuntary unemployment - should you be in the unfortunate situation that you lose your job then your loan repayments will be paid for a specific time.
  • Trauma - this is paid in the event of your being diagnosed with a serious condition such as Heart attack, stroke, organ transplant, and cancer or coronary artery surgery. This payment is not a loan payment, but an additional payment that is made according to the amount of cover you have chosen. This can range from $10,000 to $50,000.

Why do you need mortgage protection insurance?

For most people the mortgage payment is their biggest monthly expense and mortgage protection insurance is there to protect you & your family and not the mortgage provider. By having mortgage protection it will help avoid the financial strain, a major illness can create so that you can focus on your recovery.

However, mortgage protection insurance covers your mortgage repayments only. If you are looking for insurance cover that provides for additional needs, such as ongoing income and medical expenses, you may want to consider life insurance and/or income protection insurance.

 

Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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