You are Here > Home > YouTube Channel > Video: Shopping around for mortgage insurance

Video: Shopping around for mortgage insurance

Nov 23, 2018

When you take out a mortgage or bond, you will be required to take out life insurance. This is so that if something happens to you, the insurance will cover your mortgage repayments. This usually includes death, disability and possibly retrenchment cover.

What you need to know is that you do not have to take the mortgage protection plan offered by the bank. You can shop around for other life insurance quotes which you can then cede to the bank. Just make sure you are comparing like with like, and that the polices you are comparing have the same cover as well as terms and conditions.

For example, if you take out mortgage protection cover, the amount of cover should decrease in line with the reducing capital balance of the mortgage. This will reduce your premiums compared to a life policy where a set amount may be insured for life.

Another option is to cede your existing life insurance policy to the bank. Before you do this, you need to consider several factors:

  • Is the life insurance sufficient? If the value of the life policy only covers the outstanding mortgage, then there may be no money left to support your financial dependants. In this case you may want to increase the amount of life cover.
  • It is important that your dependants or beneficiaries on the life policy know that the first claim will be paid to the bank and they will only receive what is left.
  • Find out if there are any terms and conditions to ceding your life policy and what those may be.
  • Remember to update the policy when your mortgage is paid up.

Also remember that if you have a joint home loan, the bank will most likely ask both parties to take out life cover to insure their portion of the loan.

Make you mortgage insurance work for you.

1 Comment

  1. Is this cover compulsory? I dont have it on my home loan…

    Reply

Submit a Comment

Your email address will not be published. Required fields are marked *

Maya Fisher-French author of Money Questions Answered

Previous Articles

How to save on home loan insurance

When applying for a home loan, the bank will insist that you take out home loan insurance to cover the repayments in the event of death, disability, or retrenchment. Evelyn Doubell, Private Wealth Manager at NFB Wealth Management finds that it’s usually cheaper to...

Tips for a successful used car purchase

Ernest North, co-founder of AI-driven insurtech Naked, looks at some of the steps to follow before committing to a used car purchase. Numbers from TransUnion show that South Africans financed around 79 000 used vehicles in the first three months of 2021, with lenders...

Pros and cons of a pension-backed home loan

If you're looking at taking out a home loan, it may be worth enquiring whether you can use your pension fund as a guarantee for the loan. A pension fund is permitted by the Pension Funds Act to lend a member an amount of money for the purposes of purchasing or...

Video: The true cost of a fancy car

The decision on how much to spend when purchasing your car is possibly one of your most important financial decisions. In fact, banks say that the main reason they turn down home loan applications is due to affordability, and the main culprit is usually car finance....

Video: Set goals for money success

The key to achieving our money goals is to use psychology to set us up for success. When it comes to our money goals, behavioural economist Erik Vermeulen says we need to set specific long-term goals, but also have built-in intermediate success measures to make our...

Video: Investing in bitcoin

Whenever we see a surge in the price of bitcoin, I get a lot of queries from people asking how they can invest. The problem is that people are lured by the prospect of high returns rather than actually understanding what they are investing in. A sure way of telling...

Video: Understand your electricity bill

The cost of electricity will increase by 15% in April. That is triple the rate of inflation which means a bigger portion of our budget will go to paying for electricity. It is worth taking the time to understand how your electricity is charged for and to find ways to...

Video: The true cost of cashing in your pension

Do you know the true future cost of cashing in your pension? The long-term consequences are not reversible and will leave many financially destitute when it comes to retirement. This video, as part of a member education series for the Government Employees’ Pension...

Video: How to grow your side hustle

In any crisis there is opportunity. Lockdown created new market opportunities as customers became open to trying new brands through e-commerce. Research has already identified that post lockdown, people are less likely to return to major shopping centres, preferring...

Pin It on Pinterest

Share This