A mortgage insurance, also known as a reducing term insurance is a term insurance product catered mainly to pay-down a home owner’s home loan in the event of his/her death, disability or critical illness diagnosis.
The sum assured of a mortgage insurance is usually pegged to the home loan value of the life assured.
The sum assured of a mortgage insurance reduces each year in proportion to the loan amount and loan tenure of the life assured. A term insurance on the other hand provides a levelled coverage through out the policy term.
An interest rate can be added in to decide how fast the sum assured of the mortgage insurance reduces over time, the higher the interest rate, the slower the reducing rate.
Some riders include but are not limited to:
Most company provides up to 35 years term of coverage to match the bank’s maximum loan tenure.
For most companies, the premium for the death benefit and total and permanent disability benefits are guaranteed.
Premiums for riders such advance stage critical illness and critical illness waiver are not guaranteed and may be subjected to change in relation to the insurer’s future claim experience.
No, most insurers allow mortgage insurance to be taken up by anyone like a normal life insurance policy, some insurers may request the life assured shows his/her mortgage statements whilst most do not have this requirement if your sum assured is below a certain amount.
Yes, you can. You can also seek exemption from HPS if you are already covered by a private mortgage insurance if the coverage is adequate enough for exemption.
Mortgage insurance can only be paid using cash.
If you ever wish to seek a low-cost way to protect your mortgage liabilities, mortgage insurance may be the best option for you, alternatively, you may consider getting a term insurance if you prefer a levelled coverage.
If you are owning a private property or executive condominium, the sum assured do not have to be the same as your loan amount.
Yes, if you own a HDB and wish to seek HPS exemption. Mortgage insurance is not compulsory for private property owners for now. However, some banks may require you to take up mortgage insurance if you wish to enjoy their special home loan rate.
