Personal insurance a must for mortgage holders: Smartline
Personal insurance is a necessity for mortgage holders, according to Smartline Personal Mortgage Advisers.
Life insurance and income protection could protect a family's financial interests in the case of death or illness, the mortgage advisory group said.
Smartline executive director Joe Sirianni said that in Australia, where life insurance was not a compulsory requirement for mortgage holders, people needed to be aware of the risks of taking on a large debt without the protection of insurance.
Insurance within superannuation often gave people the mistaken impression that they were adequately covered, Smartline said, but most only had $150,000 - which fell short of the $300,000 required to cover the average mortgage.
If super contributions lapsed due to parental leave or redundancy, people might not have insurance at all, Smartline said, so people should seek additional insurance outside of super.
"It's also important to get advice on how much insurance is enough," Sirianni said.
"While people often take out life insurance to clear debt, such as the home loan, we generally recommend a broader approach to how the insurance might be applied," he said.
Paying off the mortgage was just one example of a number of financial pressures a person's family could be left with if that person died, such as childcare and education, Smartline said.
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