Any recommendations on mortgage insurance?

Hi anon,

If you are looking for a mortgage insurance to protect the loan, then a 20 year term plan covering the outstanding loan amount will be sufficient.

You can consider either a level term plan whereby the payout is level regardless of when the claim is made, or a mortgage reducing term plan whereby the payout drops as the mortgage gets paid off.

However, due to the relatively small difference in premium between a reducing and a level term, a level term is almost always preferred as it will ensure a full payout of $1 million in the event of death/TPD. Also, if you decide to cash out your property and move to another one, the coverage will still be $1 million which means you can still rely on the level term to cover the mortgage on your new property.

While the MINDEF Aviva term plan can cover for up to $1 million for a low premium of $41/mth, the premium is not guaranteed as it is a group plan, and if MINDEF decides not to renew with Aviva, then you will lose coverage.

In this scenario, with the coverage criteria being relatively simple, you should go for the plan with the lowest premium. However, do take into account if you might need to cover a higher amount if let's say you have to support retired parents, or plan to start a family in future (I don't know your profile other than that you are male and 40 y.o.). An independent financial advisor can help you get quotes from multiple insurers so that you can find out which is the most cost efficient option.

Hi anon,

I assume that your main focus would debt cancellation with the lowest possible cost. You have a few options to consider

1) Fixed 20 year term insurance

2) Renewable & convertible term insurance

3) Mortgage reducing term insurance

Each type of policy functions rather differently so it also depends.