Your home or property may be your biggest financial asset. Should something happen to you, don’t let the potential pitfalls of under-insurance or over-insurance cripple your ability – or your family’s ability – to meet your mortgage repayments.
Today on the ALI Group blog, we discuss the risks of not having the right amount of mortgage protection. Let’s look at over-insurance first.
What is over-insurance?
Believe it or not, there is such a thing as having too much cover – and that’s essentially what over-insurance is all about.
This rarely benefits the policyholder as they’re simply paying more than what they really need to. With mortgage protection, you want to of course make sure you’re covered for all sorts of unfortunate events, but you don’t want to insure yourself for more than required to maintain your lifestyle and meet your mortgage and debt repayments.
What is under-insurance?
On the flipside of over-insurance, is under-insurance. Under-insurance in its simplest form is essentially not having enough cover to suit your needs.
While it’s unpleasant to think about, we do need to consider what will happen to us in the case of an unfortunate injury/illness or even, death – and what happens to our home and our families if we’re under-insured.
Not having enough insurance complicates matters. Under-insurance is usually the result of an overdue niggle that we haven’t yet addressed or, based on the idea that insurance is expensive. Niggles can be easily dealt with and when it comes to costs it pays to have peace of mind, knowing that you and your family are protected, should something unfortunate happen. And with plans like our LPP, you’re able to use your claim as you see fit.
It’s worth mentioning that under-insurance can also happen when we rely purely on life insurance through our superannuation funds. The level of cover provided through super is only about 30% of the recommended level for an average young family1, and it’s important to work out how you’ll meet any gap when you’re under-insured.
Don’t put your family and your lifestyle at risk by under/over insuring. Talk to your local ALI authorised broker today to help you better understand mortgage protection or alternatively, feel free to request your quote here now.
1 Rice Warner. Underinsurance in Australia (2015)
Loan Protection Plan is jointly issued by Hannover Life Re of Australasia Ltd ABN 37 062 395 484 (Death, Terminal Illness, Living and Accidental Injury Benefits) and QBE Insurance (Australia) Limited ABN 78 003 191 035 AFSL 239545 (Involuntary Unemployment Benefit). It is distributed by Australian Life Insurance Distribution Pty Ltd ABN 31 103 157 811 AFSG 226403 (ALI). ALI receives commission for each policy sold. Any advice provided is of a general nature only and does not take into consideration your personal objectives, financial situation or needs. You should consider the Product Disclosure Statement when deciding if this product is appropriate for you.