http://thefinlens.com/what-type-of-insurance-coverage-should-you-get-for-your-housing-loan/ <br /> <br />When my clients are looking for mortgage term insurance for housing insurance coverage, I usually recommend level term insurance. <br /> <br />In my opinion, this is the best choice. <br /> <br />There are 3 reasons why I prefer level term insurance. <br /> <br />1. Level term insurance locks in the premium of the life assured at entry age, and also gives level coverage throughout the term. <br /> <br />And nowadays, insurers make it affordable and offer cheap premiums for high and level coverage (Around $1 million sum assured and above.) <br /> <br />This is why it makes far more sense to have 1 policy each, under 2 different names. <br /> <br />For example, you could have one each for you and your spouse. <br /> <br />A client of mine recently asked for a quote for him and his wife for a mortgage term insurance coverage of about $1,000,000 sum assured JOINT coverage. <br /> <br />I made a comparison between… <br /> <br />Sum assured $1,000,000 for him and his wife under the same plan based on a decreasing (Mortgage-reducing) term insurance. <br />Sum assured $1,000,000 for himself and $1,000,000 for his wife on level term insurance each. <br />The premiums for level term insurance are only slightly more than the decreasing mortgage term insurance joint plan. <br /> <br />For plan A, the joint term insurance, the coverage decreases according to the loan amount. <br /> <br />If one policy holder passes away, the plan ceases and the other (For example, your spouse) will no longer be covered anymore. <br /> <br />However, when it comes to plan B, the level term insurance, for each policy holder, the coverage of $1,000,000 is for each policy holder. <br /> <br />And even if one person dies, the other will not be affected or lose coverage. <br /> <br />Hence you get double the coverage for plan B. <br /> <br />And this is while paying the exact same premium! <br /> <br />What you should also know is that a mortgage reducing or decreasing term insurance will reduce the coverage according to the remaining loan amount each year. <br /> <br />(But the premiums usually remain constant throughout the contract.) <br /> <br />If you want to save money while enjoying double the coverage, consider level term insurance. <br /> <br />2. If you compare this to the HPS, your HPS cover will be terminated if you sell your flat, or redeem your loan earlier. <br /> <br />Similarly, if you buy a new flat or upgrade, the HPS cover for your old flat will be terminated. <br /> <br />Ultimately, buying new HPS insurance may be more expensive depending on your age. Plus it’s subject to underwriting. <br /> <br />And if you’ve already gotten level term insurance (Or decreasing term insurance) it ensures consistent and sufficient coverage. <br /> <br />3. Over time your liabilities will increase (For example, if you add new dependents or your income rises.) <br /> <br />And if you have decreasing term insurance, your coverage will drop due to the remaining mortgage loan which your liabilities increase. <br /> <br />This is why it makes more sense to have level term insurance, which can cover you for the right amount. <br /> <br />Unless you have other existing policies which are seem sufficient for
