How much Loan Protection insurance do I need for my home loan?
Deciding on the right level of Loan Protection cover for your home loan can be tricky, which is why we’ve put together a couple of suggestions to help.
Loan Protection policies linked to a home loan can insure 25%, 50%, 75% or 100% of your home or investment home loan, up to total of $750,000, as well as your minimum loan repayments. Deciding on the right level of cover can be tricky, which is why we’ve put together a couple of suggestions to help.
First, you need to consider whether any additional streams of income, such as a partner’s salary, dividends or interest on savings, could help you or your family meet loan repayments if you lost your main source of income. If you do, you might consider taking out partial cover of between 25% and 75% of your loan amount and your minimum loan repayments, depending on how much income these streams deliver.
If your day-to-day work is your only source of income or if your additional income isn’t substantial enough to contribute to your loan commitments, you might like to consider insuring 100% of your loan amount or minimum repayments, to avoid being underinsured.
The second way to decide on the right level of cover for your situation is to use our premium estimate calculator. This will allow you to see what the various levels of cover will cost.
Things you should know
This advice has been prepared without considering your objectives, financial situation or needs. Before acting on the advice, please consider its appropriateness to your circumstances. This information is provided by CMLA and where we refer to ‘we’ and ‘our’, we mean CMLA.
Loan Protection is issued by The Colonial Mutual Life Assurance Society Limited ABN 12 004 021 809 AFSL 235035 (CMLA) and is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. A Home Loan Protection Product Disclosure Statement (PDS) and Personal Loan Protection (PDS) are available online, from any Commonwealth Bank branch or by calling 13 3982 and should be considered in making any decision about Loan Protection. You can also download a Financial Services Guide (FSG).