Answers to all your Questions regarding Loan and Mortgage Protection Insurance

By: Frank Zelasko


Loan and mortgage protection insurance is designed to help you, and your family keep up-to-date with your loan repayments, when life events happen unexpectedly and regardless of mitigating circumstances. Put simply, mortgages or loans are often long-term commitments, so it makes sense to protect them.

Do You Think About the Unexpected?

There are a number of reasons why even the most responsible money managers may get into financial difficulty. Any of the following reasons can strike at any time and will leave you struggling to make your loan repayments:

>> Change in health - due to sickness, injury or disease

>> Loss of income - due to involuntary unemployment, or

>> Death and Terminal illness - when cancer, stroke or heart attack, etc. may occur.

Loan and Mortgage Protection Insurance – The Benefits

There are a number of benefits you can get from having a loan and mortgage protection insurance plan in place, which include:

>> The premiums are fully tax deductible

>> Financial protection (you will save your family the worry of lost income)

>> You will save at tax time (you will get more money back in your tax return, and this means more money in your pocket)

>> You can choose how long you would like to receive cover benefits if you are injured and unable to work

>> Benefit payouts for total and permanent disability

>> A benefit amount (e.g. hospital cash) can be calculated for each night you spend in hospital

>> Associated accident costs can be provided to cover incidental costs (e.g. counseling and rehabilitation).

Common Questions regarding Loan and Mortgage Protection Insurance

Is Lenders Mortgage Insurance (LMI) different to Loan and Mortgage Insurance?

>> LMI - is compulsory and covers the lenders/credit providers if they lend you 80% or more

>> Loan and Mortgage Protection Insurance - covers your mortgage repayments in the event of death, sickness, unemployment or disability

Does the Unemployment Benefit apply if I am Self-Employed?

Yes. You may make a claim if:

>> You have worked in your business (for an average of 20 hours per week) for 180 days immediately prior to becoming unemployed, or

>> Your business has permanently ceased trading

What Happens to my Policy if my Unemployment Claim is Successful?

Your cover continues for death or terminal illness after making a successful unemployment claim, and your premium and benefits will remain the same.

Who will be the beneficiaries?

>> For a single life policy, the benefit will be paid to the policy owner or their estate, and

>> For a joint policy, the benefit payments are made to the policy owners jointly or to the surviving policy owner in the case of the death benefit

What happens if I need to make a claim and I have other insurance policies?

Upon acceptance of your claim, the loan or mortgage protection policy will payout a lump sum benefit directly to you or your estate and this will be in addition to any other payments you may receive from other insurance policies.

What if I am a Smoker now, will my Premium Change if I Stop Smoking?

>> Yes. Your premium can be changed to a non-smoker rate if you stop smoking for 12 consecutive months, and

>> You will need to make a declaration that you have not smoked any substance during this period

So, now that you are familiar with how "Loan and Mortgage Protection Insurance" can protect you and your family against any of life's unexpected events, contact an insurance broker. He/she will understand your situation and suggest the best possible insurance policy for yourself.

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