Results 1 to 17 of 17

Thread: Don't overlook mortgage insurance

  1. #1
    mr funny is offline Any complaints please PM me
    Join Date
    May 2006
    Posts
    8,129

    Default Don't overlook mortgage insurance

    http://www.businesstimes.com.sg/sub/...49646,00.html?

    Published September 10, 2009

    Don't overlook mortgage insurance

    Your death could cost your family their home if you are not covered, says JASON ONG


    RECENTLY, my client Mr Wong called me for mortgage insurance advice. He had just bought a semi-detached house for close to $2 million. He took a loan of $1.2 million over 15 years, and was looking for a mortgage reducing term insurance that will pay off his mortgage in case of his death or total and permanent disability (TPD) while the loan is not fully paid.

    Mr Wong told me that he will never forget the time that he and his younger siblings lost their family home when his father died of a heart attack some 30 years ago, leaving his mother struggling to raise the four of them.

    Certainly, he does not want this to happen to his homemaker wife and three children.

    'When I pass away, the last thing that I would want to put my family through is to also lose the roof over their heads,' he said.

    In Singapore, mortgage insurance is not made compulsory for private property owners and those who are not using CPF to pay their monthly HDB housing loan repayments. However, the Home Protection Scheme, or HPS, is mandatory for HDB/HUDC flat owners who service their mortgage loans with CPF funds.

    Many private property owners baulk at mortgage insurance either because of inertia or misconception that it's an unnecessary cost. Without mortgage insurance coverage, however, life could be a lot harder financially for the family if things go wrong.

    Over the past years, there have been newspaper reports on households having to surrender their private properties because the sole breadwinner passed away without mortgage insurance coverage. As such, I always advise my clients who own private properties to have mortgage insurance to protect their homes and families.

    As the name implies, mortgage insurance safeguards your home and family against the unexpected, so that they will not be burdened with mortgage repayments or face the possibility of losing their home. It is available on a single or joint-life basis. If you and your spouse jointly own the home, you may want to consider a joint-life mortgage policy which pays out on the 'first death'.

    You can decide how long you want the policy to cover you, but most people have it to run concurrent with their mortgage.

    The premium will increase with the mortgage size and the length of your term. In addition, age, gender and whether you smoke are big factors in determining how much you pay. Smokers pay a lot more than non-smokers, simply because they are more likely to make a claim. For example, based on the quotation from a local insurer, Mr Wong will need to pay around 40 per cent more if he were a smoker.

    Most of the mortgage insurance plans are reducing coverage whereby the sum assured decreases annually and the rate of reduction depends on the mortgage interest rate and the policy term.

    Some of the common benefits and features:

    # Total and permanent disability (TPD) coverage up to age 70. The policyholder will receive the sum assured in instalments or a lump sum up to $2 million upon diagnosis of TPD;

    # Single or joint-life coverage is available for joint homeowners;

    # Premium payment term usually stops a few years before the end of policy term, while you continue to enjoy the coverage;

    # Option to add waiver of premium rider so all future premiums will be waived upon diagnosis of one of the 30 critical illnesses;

    # Mortgage insurance does not normally cover critical illness, which means that in the event of a critical illness such as cancer, you will still need to pay the monthly mortgage repayments. Therefore, you may need to buy a separate policy for critical illness cover;

    # Most plans will not cover any disability caused by riot, civil commotion and terrorist activities.

    Buying a home will likely be the largest undertaking you make in your lifetime, so protecting it should be a key part of your overall financial plan. Mortgage insurance will ensure that your dependants will not have the financial worry of trying to find the mortgage repayments or having to sell the property or downsizing in the event of your untimely death.

    If you are looking for a mortgage insurance policy, do shop around as premium rates and features offered can vary greatly from insurer to insurer.

    The writer is a Certified Financial Planner practitioner. The views expressed are his own

  2. #2
    mr funny is offline Any complaints please PM me
    Join Date
    May 2006
    Posts
    8,129

    Default


  3. #3
    Join Date
    Dec 2008
    Posts
    412

    Default

    Can anyone share which are the insurers with more comprehensive coverage at a good value?

    I'm looking around for one.

  4. #4
    Join Date
    Jan 2009
    Posts
    286

    Default

    Those who own a few properties, what is your take on this? Do you actually buy mortgage insurance for each property you have?

  5. #5
    Join Date
    Nov 2008
    Posts
    77

    Default

    Quote Originally Posted by shespawn
    Those who own a few properties, what is your take on this? Do you actually buy mortgage insurance for each property you have?
    not sure what others do... i have 1 mortgage insurance to cover almost the entire outstanding amt of 3 loans.

  6. #6
    Join Date
    Jan 2009
    Posts
    286

    Default

    my head of the house say that pro investor use their assets to cover their mortgages, so it is not neccessary to buy.

  7. #7
    Join Date
    Dec 2008
    Posts
    412

    Default

    IMO, I feel that it is a necessity to get a mortgage insurance if the property is a family home. As stated in the article, this is a coverage to prevent the lost of one's home upon one's death so that the family still has a roof over their head.

    However, if you are investor looking to profit from property sale, then maybe really dun have to cover every property. Afterall, if the family home is already covered, the family already has a place to stay. Other insurance benefits should see the family through for a period of time. Those properties can also be disposed off if famly members cannot handle the mortgages.

  8. #8
    Join Date
    Mar 2009
    Posts
    705

    Default

    Quote Originally Posted by shespawn
    my head of the house say that pro investor use their assets to cover their mortgages, so it is not neccessary to buy.
    Something like that lah ... juz as wat 5577 has said

    Guess the objective of getting insurance is for a peace of mind i.e. to tie over a period so tt your loved ones no need to worry short-term problem of not having a roof over their heads. But not exactly to encourage them to live off the amt & see it as a 'windfall'.

  9. #9
    Join Date
    May 2009
    Posts
    6

    Default

    My husband was rejected from Pridential and AIA cos he is diabetic. Anyone with any idea which insurance company could consider mortgage reducing insurance for him? Thanks

  10. #10
    Join Date
    May 2009
    Posts
    26

    Default

    any policy includes retrenchment ?

  11. #11
    Join Date
    Jan 2009
    Posts
    286

    Default

    Quote Originally Posted by ngloong
    any policy includes retrenchment ?
    yah, i'm intereted to sign up for that if there is. banking jobs are so volatile now.

  12. #12
    Join Date
    Jun 2009
    Posts
    128

    Default

    Quote Originally Posted by shespawn
    yah, i'm intereted to sign up for that if there is. banking jobs are so volatile now.
    I'm sure they will charge high insurance for those in the finance industry.

  13. #13
    Join Date
    Sep 2009
    Posts
    1

    Default

    Hi all, if you are keen to get mortgage insurance, you may contact the author Jason Ong at [email protected].

  14. #14
    Join Date
    Mar 2009
    Posts
    828

    Default

    Quote Originally Posted by 5577
    Can anyone share which are the insurers with more comprehensive coverage at a good value?

    I'm looking around for one.
    As what Mr funny posted...aviva.
    If you have an Indep FA, asked him to source for one. Mortgage insur is not a general insur (motor car insur is a general insur) as it involved life ...death and TPD....
    For most usual home buyer, we need mortgage insur to cover the loan...

    For those who are rich enough....it probably not necessary

  15. #15
    Join Date
    Sep 2008
    Posts
    774

    Default

    Just buy a Life Insurance and Personal Accident Insurance instead of Mortgage Insurance. Premiums are lower esp. Personal Accident cover & Life Insurance got cash back (surrender value).

    Even if you want to buy Mortage Insurance, it is not necessary to cover the full value of your home loan. Just a small % eg. 20 to 30% of the loan quantum will do since you can sell your house in times like this, and both sale proceed + insurance payout will be sufficient to cover your outstanding loan. On the other hand, if you still want to keep the home, 20% to 30% payout will likely last your family members a couple of years of housing loan instalments.
    Last edited by Blue; 07-05-10 at 13:19.

  16. #16
    Join Date
    Apr 2010
    Posts
    15,307

    Default

    Quote Originally Posted by Blue
    Just buy a Life Insurance and Personal Accident Insurance instead of Mortgage Insurance. Premiums are lower esp. Personal Accident cover & Life Insurance got cash back (surrender value).

    Even if you want to buy Mortage Insurance, it is not necessary to cover the full value of your home loan. Just a small % eg. 20 to 30% of the loan quantum will do since you can sell your house in times like this, and both sale proceed + insurance payout will be sufficient to cover your outstanding loan. On the other hand, if you still want to keep the home, 20% to 30% payout will likely last your family members a couple of years of housing loan instalments.
    I tot premiums for mortgage insurance is relatively lower when compared to the actual sum assured.... (but of coz, it is term reducing and tat explains the reduced premiums)

  17. #17
    Join Date
    Mar 2009
    Posts
    828

    Default

    Quote Originally Posted by Blue
    Just buy a Life Insurance and Personal Accident Insurance instead of Mortgage Insurance. Premiums are lower esp. Personal Accident cover & Life Insurance got cash back (surrender value).

    Even if you want to buy Mortage Insurance, it is not necessary to cover the full value of your home loan. Just a small % eg. 20 to 30% of the loan quantum will do since you can sell your house in times like this, and both sale proceed + insurance payout will be sufficient to cover your outstanding loan. On the other hand, if you still want to keep the home, 20% to 30% payout will likely last your family members a couple of years of housing loan instalments.
    Thanks, I cover 50% of the loan for me and spouse.
    we will pay it down in few years time and will probably write to Aviva to reduced it further. It a reducing term...and actually nottoo exp.

    Mortgage is optional , esp if ur life or term exceed the loan amount. we are more kiasu ans still take up the mortagge insure..just to play doubly safe. of course, that incurred some cost....well...just to buy a peace of mind.

Similar Threads

  1. Mortgage Insurance
    By MrQuotes in forum Finance and Legal
    Replies: 1
    -: 27-01-14, 13:32
  2. Mortgage insurance
    By ccsee in forum Finance and Legal
    Replies: 8
    -: 25-04-13, 20:31
  3. Mortgage Insurance / Decreasing Term Insurance
    By leesg123 in forum Coffeeshop Talk
    Replies: 12
    -: 23-10-12, 14:49
  4. Mortgage insurance
    By jeslyn12 in forum Finance and Legal
    Replies: 1
    -: 18-02-11, 16:23
  5. Mortgage Insurance
    By yowetan in forum Singapore Private Condominium Property Discussion and News
    Replies: 1
    -: 22-11-09, 00:50

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •