Australia is one of the most underinsured nations in the developed world, ranking 16th for life insurance and penetration, according to Swiss Re.
And it is not just life insurance where we fall down, but home loan protection as well.
Many Australians see insurance as an added cost, but the reality is, it is critically important. There are a variety of reasons to contemplate Home Loan Protection for your family. The future is the unknown and it's important to understand that anything can happen. The best way to navigate the hurdles that life throws at you it to be as prepared as possible.
What is home loan protection?
I wish we could say home loan protection is a couple of bouncers out the front of your home making sure no one gets in, but it isn't. HLP is designed insurance that covers you in the event you are diagnosed with a terminal illness, injured which then prevents you from working, or are involuntarily unemployed.
The coverage can be structured to give you a lump-sum payment or a monthly amount.
Home loan protection is similar to income protection but is structured to work with your mortgage repayments. Lenders will tailor premiums so that you can afford them and are sufficiently covered for what you need.
Australian Job Market
For many people, job security often ranks highly as an important factor in their decision to purchase home loan protection. The unemployment rate has steadily been increasing over the past year with full employment numbers decreasing this past month. It's very important that mortgage payers have a consistent flow of income that factor into their budget. Without it they could fall behind on their repayments. Home Loan Protection is then a very important consideration.
Cost of Living
Many Australians continue to complain about cost of living (while their wages go up too) but for good reason. Research shows that Australians pay significantly more for goods and services despite only a marginal difference in disposable income. The implications for this are that home loan protection must be prioritized in the event that cost of living increases.
Probably the most popular reason for home loan protection is in the event that something unfortunate happens to you and your family. Banks do an excellent job these days of finding the right cover for your situation that makes payments manageable. Illness, injury and many other forms of unforeseen circumstances can be covered and it's important to leverage against these.
It's important that you and your family don't overpay for home loan protection and that coverage works with your budget requirements. This means you can live your life and not worry should anything terrible happen.
If you want to find out more about home loan protection or have any other home loan questions please contact your local Mortgage Choice broker.