Why You Absolutely Need Insurance When You Buy A Property
Never trust to the Gods when planning to finance a property for the long or short term. You may have a fabulous job and have a partner who also has a fabulous job. You may have reliable tenants lined up to move in and start paying the mortgage on your property the minute you sign on the dotted line but fate sometimes plays you a hand and not a good one. You may lose your job, split up with your partner or have an accident at work. I always say Income Protection is the first thing you should think about when buying a property if you are not a cash buyer.
Income protection does exactly what it says – it will protect your income if you are unable to work. Some policies will protect up to 75 percent of your income covering you for illness or disability. Not only will it cover your mortgage and other responsibilities it’s also a tax deduction.
As the name implies, this one only pays if you die. Life insurance helps those you leave behind. It will keep your children in the schools they love and hopefully no one will have to sell any investment homes – or even the family home - at such a traumatic time.
Total and permanent disability (TDP).
If you’re unable to work as a result of suffering a permanent disability such as becoming paralysed or losing your sight, TPD will provide you with a lump sum payment. You would be free to use the payment in any way you want but it’s commonly used to pay off any mortgages and any medical expenses.
Trauma Insurance provides a lump sum benefit if you suffer one of the listed medical conditions on the policy such as cancer, a heart attack or stroke. The claim is paid on medical diagnosis.
Mortgage pension insurance
Mortgage Pension Insurance is a simplified form of life insurance which specifically covers your mortgage/s in any time of financial hardship.
Remember insurance is not a ‘set and forget’ item so review all insurance policies every couple of years or at least when your circumstances change, such as:
- You’ve bought or sold a property.
- Your income changes significantly.
- Your responsibilities have increased or decreased (including having children).
- You’ve recently been widowed, married or divorced (including de facto relationships).