Adverse circumstances in life can come without any warning and leave you in the lurch. Insurance offers peace of mind by offering a safety net to deal with any unforeseen events. A mortgage is usually your biggest liability and can take several decades to pay off. So, if you lose your job or suddenly become critically ill, you may not be able to meet your mortgage repayments. Mortgage protection insurance in Australia covers the repayments during such adverse times.
What is mortgage protection insurance?
Mortgage protection insurance is an optional insurance cover available for home loan customers. It’s a type of consumer credit insurance (CCI) and is designed to cover mortgage repayments in certain circumstances. The insurance pays your home loan instalments if you become sick or are injured, and can also help your family to make the repayments in case of your passing. Some policies may also cover loss of employment if you’re fired but do not cover resignation.
You can take out this insurance policy at the start of your mortgage and pay an annual or monthly premium to get the cover. Generally, casual or part-time employees and self-employed borrowers working less than 20 hours per week are not eligible for this type of insurance cover.