Mortgage insurance comes in a number of variations and it is important to understand these variations. You need to understand what you are covered for and what you are not covered for.
You should talk to your adviser and find out what are the optional extras are which can be included but may not be in your current cover.
Mortgage Repayment Insurance
Normally, there is a base cover which is a life insurance benefit, so in the unfortunate event of death of the person (or persons) insured, the insurer will pay the insured amount to the lender and hopefully the insured amount is enough to repay the mortgage in full.
Annual reviews of your mortgage protection should be held with your adviser to make sure it is in line with your current mortgage and debt levels.
It would not be wise to assume that your mortgage repayment insurance is automatically updated when you increase your debt levels, because this is not usually the case. You should review your cover each time you increase or change your debt levels.
Other Mortgage Insurance Options
You may ask yourself “when is mortgage repayment insurance required”? You should normally have life insurance cover as the primary insured benefit, but you should also seriously consider including some optional benefits such as;
- Trauma Cover which will pay a lump sum if you are diagnosed with a critical illness
- Total and Permanent Disablement which will pay a lump sum if you are considered permanently disabled and cannot return to work
- Monthly Repayment which will make your mortgage repayments for you each month until you are able to return to work or until age 65 if you could never return to work
Mortgage Protection Optional Extras
The optional extras are definitely worth having if you can afford it and you will usually discover that the extras may only cost a few dollars more each month, but the peace of mind you will have to know that you have more comprehensive cover will far outway the cost of mortgage insurance coverage.