While insurers in Australia aim to offer budget friendly mortgage protection plans to all buyers; at times certain buyers are asked to pay significantly more than others. There are a few factors that affect the amount you pay towards mortgage protection premiums and these factors are variable in nature which implies that they vary from person to person.
The three factors that affect the cost of mortgage protection
- Your Chances of Being Unemployed – To determine if you are likely to be unemployed in the next few years, the insurer will check if your employer or industry is letting go of people. Other factors such as your job history may also be taken into consideration if the insurer considers you as a high risk buyer. The higher your risk level for being unemployed, the more likely it is that the insurer will ask you for security through higher premiums.
- The Price of the Mortgage Payments – If you have to pay high mortgage repayments every month or year, then you will be asked to pay higher mortgage protection premiums to the insurer. If the mortgage premiums you give to the lender are affordable and within the norms then your premiums for the mortgage policy will be affordable.
- The Economy – If your country or locality is being affected by the recession, then the insurer may ask you to pay higher premiums. In addition, current market trends will be taken into consideration by the insurer before the insurer decides if you should be charged lower premiums or higher premiums.
Additional factors that can affect the cost of mortgage protection
Smokers will be asked to pay higher premiums than non-smokers since smokers are at a higher risk of developing lung, throat and mouth problems. The number of cigarettes you smoke, or the amount of tobacco you ingest will determine if you are a high risk buyer or a medium risk buyer. It should be noted that insurers consider smokers as people who smoke or consume Cigars, chewing tobacco, cigarettes and any other tobacco product.
Your medical history will also play an important role in determining how much you pay towards premiums every year. People who have survived cancer or people with diabetes, cardiac problems will be considered as medium to high risk buyers. As a general rule, the more the number of pre-existing or genetic conditions you have, the higher the premiums you may be asked to pay.
Your Age and Gender
Older buyers especially males will be asked to pay higher premiums if they have pre-existing health conditions or are likely to develop them in the near future.
Other Risk Factors
If you play rough sports such as but not include to rugby, semi professional football, extreme sports such as paragliding and water rafting or if you drive a fast car and ride a fast bike then you will be considered as a high risk buyer since you are likely to injure yourself and file a claim while the policy is active.
Terms of Your Contract
Choosing a basic contract with rigid terms can help you save money initially but such contracts tend to have exclusions, limitations and some unacceptable terms. Flexible contracts that offer maximum protection against situations that include death, involuntary loss of job, disability and critical illness will cost more but will ensure that you stay protected at all times.
Getting affordable mortgage protection insurance
- There are a few ways to get affordable mortgage plans and these ways include but are not limited to, paying your premiums in advance every year, opting for discounts you see online while purchasing a plan either from an insurer or insurance comparison website and lowering your risk factors as much as you can.
- One of the ways you can reduce premiums is by agreeing to undergo a simple physical examination and one or two blood tests if required. Insurers that do not ask for blood tests, physical examinations or the medical history of buyers, usually offer expensive policies as compared to insurers who need these formalities to be completed.
- Another way you can reduce premiums is by comparing mortgage plans online by visiting an insurance agent or insurance comparison website. Although these sites, sell policies, using comparison services is absolutely free. By comparing a few plans before making a purchase, you can understand the pros and cons of the selected plans and you can decide which plan is beneficial in the long run.
The real cost of mortgage protection
- Fact – Insurers in Australia pay millions of dollars every year towards successful claims. Insurers pay out claims on a daily basis and they have helped thousands of families if not more save their house and continue to live a relatively normal life even after the main bread winner of the family has lost his job or has lost the ability to earn income due to any other reason. Reputed insurers pay out claims as quickly as they can without making families who are already suffering, suffer more.
- Fact – As of December 2011, the unemployment rate in Australia was at 5.2% and this figure is said to be increasing due to recession and various other factors. Unemployment is a real and constant threat for most people, which often lead to stress and which in turn can worsen the health of people who are worried about the financial security of their families.
- Fact – When a successful claim is made, you will get financial help from the insurer. The insurer may take a few days or a week to pay out the claim, but once you are informed that your claim is accepted, you can be rest assured that the insurer will help you out when you need help the most. Mortgage protection plans can be taken as add on plans with life insurance plans such as term life covers, TPD plans, trauma insurance plans, income protection insurance plans or mortgage plans can be taken as standalone plans from certain insurers in Australia.