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Mortgage insurance is a type of insurance that protects homeowners by covering the outstanding home loan amounts in the event of death, terminal illness, or disability. This would ensure that in the case where the homeowner is no longer able to repay the mortgage due to such circumstances, his or her family is not burdened.
Things to look out for when selecting a mortgage insurance:
1. Coverage
Similar to personal insurance, it is important to take note of what the insurance plan covers. Death, terminal illness, total and permanent disability are some common areas of coverage in mortgage insurance to look at.
2. Policy term
You should ensure that your insurance policy term aligns with your mortgage tenure.
3. Sum assured
You should decide if you want a decreasing sum assured or a level sum assured. A decreasing sum assured means that the coverage amount decreases over time, usually in line with your outstanding loan balance.
For example, if you took a 30 year loan at $500,000, the sum assured after 10 years will be less than $500,000 as you have paid off some of the loan. For level sum assured, the coverage remains at $500,000 throughout the policy term, but the premiums are usually higher.
4. Premiums
Premiums are the amount of money you pay to keep your insurance policy going. They can be paid monthly, quarterly, annually, or as a lump sum, depending on the insurance plan. Premiums are determined based on various factors such as the sum assured, policy term, your age, health condition, occupation etc. Compare premiums across different insurance and find a plan that fits your budget.
5. Additional riders
Riders are add-ons to your insurance plan to provide extra coverage. For mortgage insurance, the most common rider would be critical illness benefit. In the case of an insurance with no rider, if the homeowner passes away, the mortgage will be paid off, but if the homeowner is critically ill, he will still have to continue paying the premium. If the insurance has a critical illness rider, the homeowner gets a payout when he is diagnosed with a terminal illness.
Manulife ManuProtect Decreasing II
- Coverage: Death, terminal illness
- Policy Term: 10 to 35 years
- Sum Assured: Decreases annually by 1% to 5%
- Premiums: Payable throughout the term with last 2 years waived
The ManuProtect Decreasing II is a straightforward decreasing mortgage insurance plan that is reviewed to keep premiums affordable with decreasing payouts. It covers you for death and terminal illness throughout the policy term.
The insurance premium payment term is consistently fixed at 2 years less than the policy term, which will mean that you will have to pay for your premiums for a longer time. The advantage would be the premium amount is guaranteed to remain the same throughout the entire policy term.
A key feature of the ManuProtect Decreasing II policy is the joint-life insured where you can nominate up to 2 people to be insured under this policy. However, the death and terminal illness benefits are only payable for the first insured person who passes away or is diagnosed with a terminal illness. It is a fuss-free and basic level of insurance policy for mortgages.
Income Mortgage Term
- Coverage: Death, total/permanent disability, terminal illness
- Policy Term: 5 to 35 years
- Sum Assured: Decreases annually by 1% to 7%
- Premiums: Payable throughout the term with last 2 years waived
Income Mortgage Term is a term insurance with a decreasing sum assured. Similar to ManuProtect Decreasing II, the Income Mortgage Term requires paying premiums until 2 years before the policy term ends, with the premium amount guaranteed to stay the same throughout the policy term. Additionally, you can choose to pay your premiums monthly, quarterly, half-yearly or annually.
The key feature of the plan would be the flexibility to adjust your policy term based on your loan liability. You can modify the term policy between 5 and 35 years, up to a maximum coverage up to 84 years old. Most reviews mention that it is a reliable mortgage insurance especially for those who want more flexibility in their policy but less suitable for those who prefer cash value in a protection plan and regular cash payouts.
It is very similar to the Manulife ManuProtect Decreasing II, with a slight difference in the sum assured rate.
Prudential PRUMortgage
- Coverage: Death, terminal illness
- Policy Term: 10 to 35 years
- Sum Assured: Decreases annually by 1% to 7%
- Premiums: Payable throughout the term with last 3 years waived
Another term insurance, the Prudential PRUMortgage covers you for death and terminal illness throughout the policy duration between 10 to 35 years. Unlike the above-mentioned plans which require you to pay until 2 years before the policy term ends, PRUMortgage offers a premium payment term of up till 3 years before the end of your policy term. Hence, you do not need to pay premiums during the last 3 years of the coverage term.
This plan is very similar to ManuProtect Decreasing II in that it is available as a joint-life policy, and the payouts for death or terminal illness is only applicable to the first insured person who passes away or is diagnosed with a terminal illness.
DBS eDecreasing Term
- Coverage: Death, total/permanent disability, terminal illness
- Policy Term: 5 to 35 years
- Sum Assured: Decreases annually by 1% to 5%
- Premiums: Payable throughout the term with last 2 years waived
eDecreasing Term is a decreasing term insurance policy. In the event of death, total/permanent disability or terminal illness, your family will receive the prevailing sum insured to pay off the outstanding loan. You also do not need to pay the premiums during the last 2 years of the policy term.
The plan is also customisable with the flexibility to choose the coverage amount between $150,000 and $500,000, and decreasing rate between 1% and 5% to match your mortgage loan interest rate.
The DBS eDecreasing is a straightforward insurance plan that is fairly similar to the above 3 mortgage insurances mentioned. The advantage that eDecreasing has would be the convenience of signing up online with no submission of health check-ups required.
Etiqa eProtect Mortgage
- Coverage: Death, total/permanent disability, terminal illness
- Policy Term: 6 to 40 years
- Sum Assured: Decreases annually by 1% to 4%
- Premiums: Payable for 90% of the term
ePROTECT Mortgage is a home mortgage insurance policy that covers your outstanding mortgage payments in the events of death, total and permanent disability, or terminal illness. You will be able to choose a policy term between 6 to 40 years, or up to age 75, whichever that is earlier. Based on your home loan interest rate, you also have the flexibility to choose your preferred interest rate of 1% to 4%.
Reviews of Etiqa eProtect Mortgage said that the premium is one of the most affordable in the market. The coverage benefits are also quite comprehensive including a decreasing lump sum payout upon events of death, total and permanent disability or terminal illness, Etiqa also covers an expense that grieving families could use which is a cash advance on funeral expenses if necessary, which is a rather thoughtful coverage.
Great Eastern Mortgage Care
- Coverage: Death, total/permanent disability, terminal illness
- Policy Term: 10 years
- Sum Assured: Tied to home loan interest rate
- Premiums: Fixed throughout the limited payment term
If you are worried about premiums increasing, the Great Eastern MortgageCare might be something for you to consider. The plan offers a fixed premium rate throughout the limited payment period with the last 2 years of your policy term waived, ensuring more predictability for you to do your financial planning.
The Great Eastern Mortgage Care is available as a single or joint-life insurance. In the case where you opt for joint coverage, the payout will be given upon the first occurrence of death, total and permanent disability or terminal illness, and the payout will be used to take care of the remaining loan balance.
The key difference that the Great Eastern Mortgage Care offers would be the worldwide coverage which ensures that you are protected regardless of your location. So even if you travel frequently or have to work or live overseas during your mortgage, your coverage is still valid.
AIA Mortgage Reducing Term Assurance
- Coverage: Death, total/permanent disability, terminal illness
- Policy Term: 10 years
- Sum Assured: Tied to home loan interest rate
- Premiums: Fixed throughout the limited payment term
The AIA Mortgage Reducing Term Assurance is a decreasing term plan. It is similar to a term plan except that the coverage reduces each year, as your dependents would have required less coverage to repay the outstanding loan in the event that you pass on or are diagnosed with a terminal illness.
The biggest difference about this plan would be the premiums which entitle you to a 25% free coverage. This means that you are required to pay premiums for only 75% of your mortgage term. If your mortgage term is 30 years, you will only pay premiums for 22 years and the remaining 8 years of coverage is free.
Another feature would be the portable coverage which allows you to enjoy the same protection if you decide to sell or refinance your property. This flexibility ensures that you have continuous coverage in the event where there are changes to your housing situations.
OCBC Mortgage Insurance
- Coverage: Death, total/permanent disability, terminal illness
- Policy Term: Aligns with home loan tenure
- Sum Assured: Determined by outstanding loan amount
- Premiums: Adjust annually based on age
OCBC Group Mortgage Insurance is a mortgage reducing term assurance plan that covers the remaining balance of your home loan if you experience death, terminal illness, or total and permanent disability.
The key difference about this plan would be the premiums which are automatically adjusted annually as you pay off your loan, which means the premiums get lower as the outstanding loan balance decreases.
Similar to the AIA Mortgage Reducing Term Assurance, the OCBC Group Mortgage Insurance can be ported over to your new loan or maintained even if you decide to sell your property, but only after 3 years. For mortgages up to S$1.25 million, there is also no medical underwriting required.
This mortgage insurance may be beneficial for those who take a home loan with OCBC, as there is a joint coverage discount where each insured individual enjoys a 5% discount on premiums if they take on this insurance together.
Tokio Marine Mortgage Protection Plan
- Coverage: Death, total/permanent disability
- Policy Term: 10 - 30 years, expires by 75th birthday
- Sum Assured: Determined by outstanding loan amount, select between 0% - 9.75%
- Premiums: Fixed throughout the term
Tokio Marine Mortgage Protection Plan is a reducing term assurance plan that offers a payout that is equivalent to the remaining loan balance in the event where the policyholder passes away.
The sum assured decreases over time, aligning with the decreasing mortgage balance remaining every year. You can choose an interest rate between 0% and 9.75% (in 0.25% increments) to match your loan’s interest rate, ensuring that the coverage corresponds appropriately to the declining loan amount.
Premiums are regular and fixed throughout the term with the last 3 years waived. This means that if your policy term is 10 years, you will only need to pay for 7 years. Joint life coverage is also available with a payout provided only for the first insured person who passed away. For the total and permanent disability benefit, the coverage is valid up to 65 years of age with the maximum benefit of $4.5 million per life, inclusive of all other policies that you may have with Tokio Marine Life Insurance.
Singlife Home Protection Plan
Although this is not a mortgage insurance, Singlife offers a comprehensive range of home insurance that you may find helpful in protecting your property and its content. There are 3 tiers of home protection plans offered - Home Lite, Home Standard and Home Plus.
The key features of the home protection plans include coverage for protection of household contents in cases of theft, fire and natural disasters, providing alternative accommodation and emergency cash allowance in the cases where your house becomes inhabitable, and coverage for legal liabilities for injury to others or damage to third-party properties.
On top of mortgage insurance which covers your loved ones in the case where unfortunate events occur and there is a loss in income to finance the home loan, the home protection insurance may be worth considering to protect the family in unforeseen circumstances or accidents.
You may have noticed that most mortgage insurance plans are fairly similar with the same coverage, policy term, premiums and benefits. It is essential to assess your specific needs and consult with a financial advisor to understand the requirements and benefits of each plan to determine the most suitable insurance coverage for your situation.