I’ve Bought A New House - What Do I Need Next?
For many of us, when we buy a house, we’re not just thinking of ourselves. We’re also thinking of our family and leaving a legacy. But one common worry of any homeowner with a mortgage is what would happen if they passed away.
Mortgage loans often take over 20 years to pay off, and a lot can happen within that time. What would happen to your family if you passed away or were unable to work? Especially if you were the sole breadwinner in the family, how would your family bear the cost of the mortgage?
This is where mortgage insurance becomes important. Read on to find out why it is crucial to have mortgage insurance and how it can keep a roof over your family’s heads in the event of any of life’s uncertainties.
What is mortgage insurance and how does it work?
First, let’s understand what happens if you are unable to make your loan repayments: You will either have to sell the house, or the bank will seize it and auction it off to recover the loan, leaving your family without a home. Sounds dire, right?
However, if you had bought mortgage insurance, your family would enjoy financial coverage for the outstanding housing loan you owe. Income’s Mortgage Term offers you this protection should you be unable to pay off your home loan repayments, either because you have passed away or you suffer a total and permanent disability (before the age of 70) or terminal illness.
How does it work?
If any of these unfortunate events befell you, your mortgage insurance would pay out a lump sum that could be used to repay the outstanding loan amount, ensuring that your family would continue to have a roof over their heads in case of unexpected events. 
How much coverage do you need?
It is advisable to buy a mortgage insurance with a sum assured equivalent to your mortgage loan, and a policy term the same as the mortgage loan tenure. You can also choose from a range of interest rates (up to 7%) to ensure that your mortgage loan is covered. Keep in mind that your sum assured of your mortgage insurance is not levelled and will decrease over the years, similar to your mortgage loan amount.
To enhance your coverage, Income’s Mortgage Term also offers a variety of riders you can choose to add on. For instance, with the Dread Diseases Premium Waiver, you can enjoy waiver of future premium payments in the event of the diagnosis of dread diseases during the rider term. This is important so that you and your family can focus on your recovery instead of worrying about the next insurance payment.
Mortgage Insurance vs Home Insurance — What’s the difference?
Home insurance provides payouts when something happens to your property and the contents within (ie. your furniture etc), such as a fire, flood, or burst pipe. Mortgage insurance helps if something happens to you (as outlined above) – so that you (or your family) can continue paying off your home loan. The lump sum provided by mortgage insurance to offset your loan eliminates the risk of the banks repossessing your house.
Do I need mortgage insurance?
This boils down to one question: Can your family pay your mortgage without you?
Even if they could, it would be a huge burden. And if they couldn’t, they would have to deal with the difficult and complicated task of selling the property at an already heartbreaking time (due to the misfortune that has just fallen upon you). If you are a parent and something bad has happened to both of you and your spouse, having mortgage insurance ensures that at least your children are protected and will have a home to their names.
Note that the Home Protection Scheme (HPS) is compulsory if you are paying for your HDB flat using your CPF. However, if you have mortgage insurance, you can apply to be exempted from HPS.
Mortgage insurance is a way to take care of you loved ones.
At the end of the day, we can’t control everything, but we can be prepared. Securing your family home for your family signifies your care for them. Even in the face of life’s uncertainties, having a lump sum to help with the mortgage can be a great comfort to your loved ones during difficult times.
Protect your family from having to bear any outstanding mortgage loans in unexpected events with Income’s Mortgage Term, and connect with an Income Advisor today to find the best plan for you. Give your loved ones peace of mind that their home – the place that is so often the centre of a family’s world – will remain theirs.
This article is meant purely for informational purposes and should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income Insurance products mentioned are specified in their respective policy contracts. For customised advice to suit your specific needs, consult an Income Insurance advisor. This advertisement has not been reviewed by the Monetary Authority of Singapore.
These policies are protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Income Insurance or visit the GIA/LIA or SDIC websites (www.gia.org.sg or www.lia.org.sg or www.sdic.org. sg).
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