Buy Mortgage Insurance Singapore | Reasons for Mortgage Insurance

Insurance | Mortgage Insurance

Most people do not know much about mortgage insurance. Mortgage insurance looks like a simple product. But we suggest you understand how it works and its importance. You may be wondering what are the benefits of such insurance? To begin with, there are many advantages to mortgage insurance. Read below to find out why the premiums decrease, and why different interest rates are involved? In this blog, we tell you reasons to buy mortgage insurance.

Reasons to Buy Mortgage Insurance in Singapore:

Protect the Home you Built for your Family

Home is the most valuable asset for most people in Singapore. The bank legally owns your home as long as your mortgage payment is still outstanding. As a result, in case you are unable to make your mortgage repayments, the bank has the right to sell your property. The bank will do this in order to recover the mortgage you owe as a debt. And don’t forget, it is some serious business! If you are your family’s sole breadwinner and something unfortunate happens, they may no longer have a roof over their heads. In case your family is unable to pay back the mortgage then, the house you bought with your hard-earned money will be no more.

Protects you from Unforeseen Situations

What if you become permanently disabled or critically ill? And you are unable to meet the mortgage repayments. In this scenario, the bank has the right to sell your home as well. Unless you have enough insurance to pay off your mortgage. You already have term life insurance, as well as other endowment and investment-linked policies. And are wondering if you really need another mortgage insurance policy? We recommend you buy mortgage insurance in Singapore even if your current insurance policies have a combined sum assured that is equal to your outstanding mortgage.

Cheapest Term Insurance in the Market

Mortgage Insurance protects you for a set period of time and is designed to cover your outstanding mortgage. It gives coverage in terms of tenure and many other benefits. Additionally, you will get coverage for outstanding mortgage amounts and applicable interest rates. Mortgage insurance is known as decreasing term insurance in the insurance industry. This is because the amount of coverage decreases over the course of your policy.  Similar to how your outstanding mortgage decreases over time. The last few years of the mortgage insurance will be free, once the amount of coverage decreases to less than $50,000. And you don’t have to pay any more premiums after that.

Protection for a Specific Requirement 

Most people have different insurance policies for different reasons. And we suggest, it is best to keep your other insurance policies for exactly what they are designed for.  You can understand this better with the following points:

Term Life Insurance

Term and whole life insurance can help you replace your income and provide your family financial security. Especially, in the event that something unfortunate happens to you. Moreover, as cash value accumulates over time, whole life insurance can be cashed out in the future, in part or in full.

Endowment Policy

Endowment policies are meant for meeting various financial needs. Most people use it for a specific goal. For instance, you can use your endowment policy amount for your child’s education, or as a wedding gift.

Investment Policy

This is for people who seek higher returns and have a high-risk tolerance. Investment-linked policies are designed to protect people with limited investment knowledge.

How to Choose Mortage Insurance?

It is best to buy mortgage insurance that is specifically designed to cover your mortgage liability. You can opt for mortgage insurance that closely matches your mortgage tenure and the mortgage amount. So, that you can be assured that your mortgage will be paid off in full if some unforeseen events occur. Property investors can choose a large level-term insurance policy. For example, $x million coverage so, you don’t have to cancel and re-apply for mortgage insurance every time you sell a property.

Mortgage Insurance in Singapore

Most of the insurers offer mortgage insurance in Singapore. Also, the application process is relatively simple. However, there are a few exceptions like some health declaration questions. If you are an HDB buyer, you can choose the Home Protection Scheme (HPS) administered by the CPF Board. Alternatively, you can opt for a private insurer. And notify the CPF Board to exempt you from the HPS requiremnet.

So, now you know the reasons to buy mortgage insurance in Singapore. Make the right choice and secure your assets!

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