The benefits of mortgage protection insurance

Yellow Brick Road

Many people are under the mistaken impression that they have sufficient Life Insurance within their Superannuation fund.

Various estimates indicate that on average, Life Insurance within Superannuation provides for as little as 20% of the cover actually required. Further, we know that Australian’s are generally a positive bunch, so they will not seek out Life Insurance to cover this gap. The unfortunate result of this means that Australians remain on average one of the most underinsured nations in the developed world. The Life Insurance market can be somewhat daunting for those uninitiated.

Outside of Superannuation, there are three main ways to acquire additional Life Insurance; those will be explained in a little more detail below:

  • Direct to market offers. These are often phone and internet based sales, typically supported with television advertising. Websites often provide calculators where you can determine for yourself how much cover may be required. In general, these services will not recommend a level of cover appropriate for your needs; you need to decide this for yourself. Should you wish to obtain advice and not know where to start, that is where a financial planner can help. 
  • Financial Planners. If you approach a financial planner, they will generally take the time out to look at your personal situation, dependants, and provide you with a recommendation on the various amounts of cover you should have. This includes not only Life Insurance, but also Income Protection Insurance, Trauma Cover among others, it is important to note that planners will generally charge a fee for this service; however, they will also be obliged to provide you with a solution that not only takes care of your needs, but also considers the budget you are operating to. For the uninitiated, this may be a big step to take, but at the very least it will arm you with information about what sort of cover you should be considering for your circumstances. There is generally no obligation to take any of the cover recommended. 
  • This leaves us with the last main way of acquiring some level of cover, Loan or Mortgage Protection Insurance.

This is generally an acquisition of convenience, under home lending legislation a home loan broker/credit representative is obliged to ensure you can afford your home loan without undue financial hardship.

Loan Protection Insurance is designed provide you with adequate cover with regard your new loan so that you are not financially disadvantaged in the event of the unexpected. Loan Protection often provides Life cover as well as cover for some serious medical events and is designed to do the heavy lifting with regard your loan when you cannot. Often couples or young families question the need for this type of cover, however, more often than not, the household cannot function financially if one income disappears either for a relatively short term through illness or injury or permanently.

Yellow Brick Road provides a range of personal risk insurance solutions including Mortgage Protection Insurance all the way through to a fully personalised plan. While we believe a personal plan will provide the best level of cover, our objective is to offer good value solutions for customers on the terms they are comfortable with. So next time you are offered mortgage protection insurance, it may just be worthwhile considering this unless you are going to seek out other forms of cover. Some cover for the unexpected is better than none.