The Difference between Income Protection and Mortgage Protection

For many, protection insurance is considered all the same, however there is a vast difference between income protection and mortgage protection. It is important to understand these differences before taking out protection insurance.

Income protection insurance helps you protect your income in case of illness, accident or disability that has left you unable to work. Most income protection insurance policies will pay out approximately 60 to 70 percent of your income while you are out of work. These payments are to use towards expenses such as medical bills, loan repayments, grocery expenses as well as other miscellaneous expenses.

It is important that you protect yourself and your family so you can continue to cover utility bills possible medical bills and all other household expenses, though protecting your mortgage is just as important.

Mortgage protection insurance on the other hand secures your mortgage repayments if you are permanently or temporarily not working. These payments will cover the Equated Monthly Installment (EMI) of your mortgage.

Mortgage Protection Insurance will protect you against loan defaults and will ensure your mortgage is paid on time without fear of defaulting on your loan. If you are unable to make your loan repayments you run the risk of losing your property.

Having the right insurance cover and understanding your policy will ensure you are properly protected incase of unforeseen circumstances.

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News

The Difference between Income Protection and Mortgage Protection
For many, protection insurance is considered all the same, however there is a vast difference between income protection and mortgage protection. It is important to understand these differences before taking out protection insurance.
Income Protection
When making a property investment, your top priority is likely to be how to afford the mortgage repayments. Whilst you will almost certainly have purchased home insurance to protect your investment, there are other possibilities you also need to consider to ensure you are protected in every eventuality.
Mandatory fact sheet to educate borrowers about LMI
A mandatory mortgage fact sheet for home buyers has recently been suggested to educate them about LMI.
Insurance tax reforms to be discussed
The Federal Government made a move to put insurance taxes back on the national tax reform agenda, stating that it is an inefficient means to gather revenue.
Why should you invest in life insurance?
Whilst the majority of people wouldn’t think twice about insuring their home or car, personal risk protection is often perceived as expensive and unnecessary. In the current economic climate many Australians are hesitant to invest in life insurance.

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