We have been able to borrow without taking out Mortgage Insurance. However we currently pay about $3800 per year for our life insurance (which is non tax deductible). It has been suggested to us that rather than have life insurance, we would be better to ensure that all future mortgage repayments are covered in the case of our death. I assume the insurance premiums would be tax deductible.
The cover we currently have with our life insurance would not be enough to pay out our mortgages.
I’m waiting on some details from the NAB on their LoanCover but perhaps someone can offer some advice?
Thanks
ShirleyHi Shirley,
Great Post!
The first thing I’d say is that your life insurance may be more tax effective if you organise it through your superannuation fund due to some tax perks.
As for life insurance generally, you need to have a look at the risk that you want to insure against. For most people, life insurance is about insuring against lost income in the event of death.
Additionally, there is also coverage needed to pay out debts should your capacity to earn become impaired.
If you only need the latter then you may get away with a mortgage protection policy, which I assume would be deductible if the property was bought for investment purposes.
You raise a great point though, and it is a matter that is overlooked by the majority of investors.
I’d be interested to read the thought process behind your final decision.
Cheers,
Steve McKnight
**********
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May I suggest you discuss your insurance policies with an insurance broker who would have a better understanding of the range of products out there, rather than talking to a bank who have a vested interest in selling you their product? (I appreciate that insurance brokers also have an interest but at least they have a wide range of products)
Cheers,
Shushar“All our dreams can come true, if we have the courage to pursue them.” – Walt Disney
Hi Guys,
This is an interesting issue, as for Mortgage Insurance and Life Insurance, you might find yourself eventually having to take out both. (and trust me, it hurts the pocket… [
])Just interested to know, which bank was trying to sell you there insurance product?
Cheers,
sisS.I.S. – We’re with the NAB but no they weren’t trying to sell their insurance to us. A friend just suggested we look at our insurance options and we found out that NAB do offer something called National LoanCover.
We won’t be making any hasty decisions and will be checking all our options, including contacting an insurance broker – thanks, Shushar, for your suggestion. Do you know of any on the forum?
Shirley
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