Mortgage insurance vs Income protection

Discussion in 'Loans & Mortgage Brokers' started by Mihi, 15th Oct, 2021.

Join Australia's most dynamic and respected property investment community
Tags:
  1. Mihi

    Mihi Member

    Joined:
    12th Oct, 2021
    Posts:
    8
    Location:
    Melbourne
    Hello folks,

    Looking for insight from experts regarding Mortgage insurance vs Income protection.

    Have you taken either? What made you choose the particular?

    Would appreciate any leads and insights.
     
    Mihi, 15th Oct, 2021
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,633
    Location:
    Gold Coast (Australia Wide)
    Very diff things

    If you mean Lenders mortgage Insurance, that protects the lender and affords you a lower deposit, but offers you no benefit if you cant work.

    If you are talking Mortgage Protection insurance, ie some of the basic tick and flick life products - they dont offer Income Protection

    Income Protection usually covers 75 % of your income if you cant work and you dont have a work cover claim.

    Insurance policies vary widely and its a bit of a cesspit in terms of definitions of "cant work".

    Further, most peops dont know the cover they may have within their Super will usually only pay for 2 years.

    Seek the services of a good Financial Adviser Planner who can usually do a combo/hybrid policy within Super or paid from Super, and an external top up policy which pays after the Super Policy may dry up

    ta
    rolf
     
    Rolf Latham, 15th Oct, 2021
    #2
    wylie likes this.
  3. MB18

    MB18 Well-Known Member

    Joined:
    25th Sep, 2018
    Posts:
    1,400
    Location:
    NT
    I've had/have income protection but not for the purpose of being able to repay a mortgage which I assume you are getting at?

    As @Rolf Latham says you need to understand the inclusions, exclusions, and definitions.

    Some only pay out for a couple of years, some until retirement - make sure those are indexed.
    A number of occupations are excluded, and generally policies only pay out for disability reasons and not redundancy.
    If you do claim there will be an expectation to retrain or at least do something and that will be an ongoing 'relationship' you will have with the insurance company.

    There is usually a policy cap on payouts of $2m-$3m but if you are young, earning reasonable money, and have payouts indexed, you will hit that cap far earlier than retirement age anyway.

    Oh, and they are not always cheap policies and the annual premium increases can be steep.
     
    MB18, 15th Oct, 2021
    #3
  4. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    14,004
    Location:
    Brisbane
    Our insurance guy (who is also a financial planner) could help you.

    I have no affiliation, except being a very happy customer.

    He's good.

    Jason Nairn. 0432 918 214
     
    wylie, 15th Oct, 2021
    #4