Mortgage Protection

In the Sunday Times today, Lorna Tan talked about protecting the roof over your head and the importance of mortgage insurance.

Summary of the main points highlighted:

1. The amount of cover
Is there other insurance or other means to meet repayments if needed?

2. Buy on a joint life basis

3. Buy early
The older you are, the higher the premium you have to pay.

4. Interest rate assumption
There is a risk that the insurance proceeds might not be enough to pay off the outstanding loan.

5. Guaranteed premiums

6. Check the supplementary benefits
Check the definition of what constitutes total and permanent disability and whether the payout comes in a lump sum or as instalments spread out over a few years. A mortgage cover that offers to waive the premiums if the insured is diagnosed with critical illness.

Mortgage insurance is indeed important, another option is to consider downgrading or alternative living arrangements if necessary.