When most Kiwis get a mortgage the mortgage broker and often the bank staff will ask them about mortgage protection insurance. They should explain that it’s a good protection to have so that you and your family can keep a roof over your heads should something go wrong and you either were to die or be unable to work.
Most of the mortgage protection plans cover both life cover and some form of repayment cover.
What Mortgage Protection Often Doesn’t Cover
Quite often the “so called” mortgage protection covers have only life cover, meaning that you get your mortgage paid off if you were to die. This may seem quite logical; however most people are not expected to die soon.
You should also ensure that you have the repayment cover within your insurance plan.
Unfortunately many of the mortgage protection plans do not have any repayment cover as people either think it is not needed or are not prepared to pay the extra for it. The sole reason that repayment cover is more expensive than life cover is that people claim more often; hence obviously it is a type of cover that you should include.
Redundancy cover is another type of cover often not considered.
Kiwis tend to think that they will not be made redundant and in good economic times they may be right.
But the economic cycle means that there are good times and not so good times, and during those times that are not so good many businesses are forced downscale their business or even close and that means making staff redundant.
That may mean that you could get made redundant too, and how would that impact you financially?
The smart thing to do is to have a look at your options … see if redundancy cover is something that you should add to your mortgage protection plan.
What Redundancy Cover Does
Most people take out insurance for peace of mind and redundancy cover is no different.
When you take out the cover you are not expecting to be made redundant, but you may also know that your industry has a higher risk than many.
There are industries and businesses within sectors that operate in New Zealand and do soar to great heights but can also come crashing down. These may be due to local or global economic factors, weather events or due to other factors. There are many examples that we have seen over the years where businesses have struggled and had to let staff go.
Most redundancy policies in New Zealand will be part of a mortgage protection cover and will pay a benefit (your mortgage repayment amount) for up to 6-months to help you financially while you look for new employment.
Your insurance adviser can provide full details of what a suitable policy will cover.
Review Your Mortgage Protection Cover Today
You may already have a mortgage protection cover that was arranged through an adviser or with your bank. The recommendation is to have that reviewed to ensure that you know exactly what you are covered for and to ensure that it is the most suitable plan to have.
If you haven’t got any type of mortgage protection cover then you should seriously consider if you need it.
When you do complete a review then you should get the cost of redundancy cover quoted as it might be more affordable that you would expect.