When availing a mortgage it mandatory to buy life insurance, which pays out the outstanding mortgage on death of the borrower.
Most banks offer a group life insurance along with the mortgage, that typically covers life and disability. However it does not cover critical illness.
Although not mandatory it is highly recommended to include critical illness cover; when availing life insurance for your mortgage, because a diagnosis of critical illness will more often result in loss of income and cash flow crisis, making it difficult to pay the mortgage.
A critical illness rider will payout the mortgage; on diagnosis of one of the 35 critical illness covered by policies issued by leading insurance providers in UAE.
Click here to know more about critical illness rider.
Also read 3 Important Facts About Mortgage Insurance In Dubai.
Most insurance providers have dedicated mortgage insurance plans addressing the protection needs of property investors; the following table provides a snapshot of the mortgage insurance plans;
|
Provider
|
Plan
|
|
Zurich International Life Limited
|
|
|
Friends provident International
|
International Protector – Decreasing Term
|
|
Salama – Islamic Arab Insurance
|
Baity –Mortgage Takaful Plan
|
|
Metlife
|
Decreasing Term Insurance
|
Thanks to quick processing of mortgage based life insurance applications, it is now very easy to avail a personalised mortgage insurance with critical illness cover.
Zurich international life is now offering life cover without medicals for up-to $500,000.
So if your mortgage is less than AED 1,838,000/- you can avail a personalised mortgage insurance quick and easy, without the hassles of medical tests.
The following are indicative premiums for a 35 years old male; non smoker availing a mortgage insurance of AED 1,500,000 for a 25 years term;
|
PLAN
|
PREMIUM
|
PERCENTGE
|
|
LIFE COVER ONLY
|
AED 2,159.75
|
0.14%
|
|
LIFE AND DISABILITY COVER
|
AED 2,749.12
|
0.18%
|
|
LIFE AND CRITICAL ILLNESS COVER
|
AED 6,773.03
|
0.45%
|
Usually banks charges a fixed percentage (0.4% - 0.6%) of the mortgage amount as premium for life insurance protecting the mortgage under their group insurance plan.
This can work in benefit of people above age 45 or people with pre existing health conditions, but for young and healthy individuals, it may be prove to be costly.
It is better for younger individuals to avail personal mortgage cover with better coverage scope and more affordable premiums.
What about you? Do you have a mortgage or are looking to avail a mortgage?
If yes, please call me to check the best premium options for your mortgage insurance.
To know more and setup personal meeting to discuss about mortgage insurance or a comprehensive financial plan.
Click here to schedule a discovery call.
