When it comes to buying your new home, the insurance is just as important as the home itself.
There are a number of types of insurance you’ll need to consider: Loan protection insurance, building or home insurance, and contents insurance to name a few.
Loan protection insurance
Everyday life events can impact your ability to meet your loan repayments. As part of responsible lending, we have a duty to ensure you have the capacity to service your loan without undue hardship.
Loan Protection Insurance can be an effective tool to help cover your mortgage should you find yourself unemployed, unable to work through injury or are diagnosed with a serious illness.
This video from the ALI Group explains Loan Protection Insurance in further detail:
Loan Protection Plan benefits at a glance:
- Death and Terminal Illness Benefit (12 months life expectancy). Pays the loan amount rounded up to the next $10,000 this is subject to a minimum of $50,000 and a maximum of $750,000
- Living Benefit covers 11 serious medical conditions. Pays 30% of the Death Benefit
- Cover is flexible- you can reduce monthly benefit on application to a minimum of $1,000
- Up to 3 monthly benefits for involuntary unemployment occurring within the first 12 months of the policy (a one month waiting period applies)
- 30 days free cover– valuable time for you to evaluate your protection needs
- Multiple borrowers can be covered including non-applicant spouses of borrowers
- No medicals required and cover available for all occupations
- Benefits are paid directly to you and can be used for any purpose
Building or home insurance
Depending on the type of loan you’ve taken out, it may be compulsory for you to take out building or home insurance to safeguard the lender’s interest in the property. Even if this is not mandatory, it is strongly advisable.
Building or home insurance covers you for damages to your property or its fixtures. Depending on your level of cover, you may be able to protect yourself for anything from fire and storm damage to burglary. Essentially, home insurance covers the cost of restoring your property to its present condition if it is damaged. Make sure you read and understand the policy as insurance cover can vary from issuer to issuer. Also, don’t underestimate insurance costs, as you may end up out of pocket should disaster strike.
Contents insurance protects you in the case of loss or damage to your personal belongings and items in your home, such as whitegoods, clothing and furniture. While you may already have contents insurance, it’s a good idea to update it after a move into a new property – especially if you’ve decked out your new house with brand new furniture and appliances.
You’ll usually have a choice between two types of contents insurance: a policy that replaces the old goods with new ones or you can opt for an indemnity policy, under which you’ll receive the depreciated value of what was damaged.
Depending on your circumstances you may also wish to consider insurances such as:
- Life Insurance
- Income Protection
- Trauma Insurance
- Total & Permanent Disability Insurance
- Business Expense Cover
- Business Loan Cover & Partnership Protection
As you can see, like mortgages, there are many insurance products and options available to you that will help protect your assets and your income. Let us know if you would like a free consultation with a Financial Planner to discuss these options further.
Tips to finding the right insurance
Take time to shop around: Compare the price of each policy with the cover offered – don’t go for a cheap deal with very little cover or pay top money for cover you don’t really need.
Engage specialists: Speak with us for options on the insurances related to your new property purchase – we’ll be able to arrange the policies for you or alternatively refer you to a specialist.
Keep documents secure: Remember to keep copies of your insurance policies, receipts and photographs away from the house, as they won’t be much help to you if they are damaged. Leave a set at your parents or a friend’s house, for example.
Important information about the ALI Group (relates to the Loan Protection Plan)
Licensee: This information has been prepared by Australian Life Insurance Distribution Pty Limited, ABN 31 1031 57811. This company is the holder of an Australian Financial Services License (AFSL 226 403). Your loan consultant is acting as an authorised representative of the licensee in offering to arrange for you to obtain cover.
General Advice: Where advice has been provided in this material, it has been given without taking into account your objectives, financial situation and needs. Before acting on this advice you should consider its appropriateness having regard to these matters. Your loan consultant does not provide you with advice in connection with Loan Protection or your insurance needs beyond providing this information to you.
Product Information: Loan Protection Plan is issued by MetLife Insurance Limited (ABN 75 004 274 882) (AFSL 238 096) and ACE Insurance Limited (ABN 23 001 642 020) (AFSL 239 687). The product information provided a summary of the features, benefits and exclusions of these products. For more detailed information you can obtain a copy of the Short Form Product Disclosure Statement for these products from your loan consultant. This should be considered when deciding to acquire the product.