How long could you service your home loan for if you became sick?
A new survey found that in the event of a sudden illness requiring time off work, 44 per cent of Australians could not service their home loan for more than four months if they became sick.
Additionally, The research from mortgage insurer ALI Group found 56 per cent of those represented in the survey were under 30 years old and would not be able to meet their repayment deadlines for more than three months if they were unable to work.
Despite the inability to service a loan without work, one in two (48 per cent) Australian mortgage holders say they are worried about a serious illness impacting their future.
Yet, Australia is the 16th most underinsured nation in the developed world.
While Huy Truong, CEO of ALI Group, says the survival rates for a serious illness like cancer are up, people should be able to focus on their recovery without any added financial stress.
“The reality is that many Australians are living paycheck to paycheck, which is echoed in this research,” says Truong.
“With high mortgage levels, Australian home buyers need to be aware of their financial vulnerability due to serious illness and should look for ways to protect their mortgage repayments in the event of illness. We shouldn’t be forced to lose our homes when life gets in the way.”
Something many people don’t realise is that super funds come with a life insurance policy, which can include income protection.
According to ASIC’s Money Smart website, your employer’s default super fund must offer the minimum level of life insurance coverage.
Purchasing insurance through your super fund does have its benefits. For example, it’s often cheaper and the premiums are deducted from your account. However, as ASIC points out, your level of cover may be limited, payout times may be slower and the premiums reduce your superannuation balance.
Still not sure? Your super fund’s website will have a product disclosure statement (PDS), explaining everything you need to know about the cover available.
For more information, speak to your Financial Planner about achieving better results from your superannuation fund or attend a Wealth Creation Course to learn more. Get 50% off with discount code: SW50BLG help protect your loved ones from unwanted financial burdens.
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