When you move into your dream home, you wonder where you’ll arrange the sofas in the living room, and how long you can live with the peach-coloured carpet before replacing it.
The last thing you may be thinking of is how the mortgage will be paid if anything (knock on wood) should happen to you. But when you’re obtaining a loan for hundreds of thousands of dollars, experts warn that life insurance and income protection is something property owners need to pay more attention to.
“Having protection in place when taking out a loan ensures that, should the unthinkable happen, your family will not be left with a heavy financial burden,” says Kyle Heinrich from www.lifebroker.com.au.
With Australia being“one of the most underinsured nations” in the world, Heinrich believes mortgage holders don’t give enough thought to the financial responsibility a mortgage imposes well into the future.
“The key benefit of having cover is that should you or the main breadwinner in your family pass, your insurance will be able to cover the cost of your mortgage and, if you choose, an amount left over to ease the burden of any other debts,” he explains.
“Without cover, families will often have to sell their homes, relying on friends or family for support before they can get back on their feet. For some, this can takes months or even years. By getting the right cover you can rest assured that in the event of the unthinkable, you’ll be okay.”
Homeowners aren’t the only ones who can benefit from an appropriate level of income protection and life insurance. Property investors will also pass on a sizeable debt burden if they become seriously injured or pass away.
Most prudent property investors arrange landlords and building insurance policies on their investments without a second thought, and consider these premiums as being part of “the cost of doing business”. It’s worthwhile considering life insurance and income protection premiums in that same category, as they offer a level of comfort and financial protection in the event of anything going wrong.
Best of all, income protection premiums are fully tax deductible. Life insurance premiums can be deductible in certain circumstances – just make sure you read the fine print.
According to Life Broker, “If life insurance and total and permanent disability (TPD) insurance are organised through a superannuation fund, premiums might be tax deductible. For income protection insurance it’s a different story, these premiums are always tax deductible, whether it’s through a super fund or not.”
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It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan