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You’ve saved for a deposit and waited patiently for the right property, in the right location, at the right price, to come onto the market. Finally, it has and your offer to purchase has been accepted along with your home loan application. Congratulations! You are a proud homeowner! You’ve also got a rather large home loan to pay off over 20+ years. It’s a long time, and anything can happen. Take out life insurance and you can be sure your bond will be paid and your family secure in their home if you were to pass away unexpectedly.
Choosing a life insurance company for your home loan
It is not compulsory to take out life insurance with a home loan, although your home loan provider or bank may insist upon it to ensure that the loan will be repaid. It is also a responsible thing to do, because if you don’t have insurance and you pass away, the bank or home loan provider can repossess your home, leaving your family without a place to live.
You can take out a life insurance policy to cover your home loan amount from any insurer. It is likely that your home loan provider or bank will offer insurance as part of your home loan agreement, but it is your choice to accept their offer, or to take out your own life cover policy and cede it to your home loan provider or bank.
Taking the cover from the home loan provider or bank will be convenient, and the sum assured will be as much as is required by your outstanding home loan balance. The premium will also be included in your home loan repayment amount each month. However, there is no guarantee that the premium will be the lowest available, so it may be worthwhile to investigate how much a life cover policy would cost for the cover you need!
1Life's Pure Life Cover: affordable and convenient
You can obtain quotes online from different insurance companies to compare premiums, including 1Life Insurance. 1Life’s Pure Life Cover offers cover for up to R10 million, with no waiting periods for accidental death, at a competitive premium. No medical exams are required other than an HIV test, which can be done at a local Clicks or Dis-Chem pharmacy using a mouth swab. Premiums are fixed for 12 months, and you can be covered in minutes!
How to obtain a quote
Visit our website, request a quote and if you are happy you can apply online and save up to 13% on your premiums.
Remember to cede your 1Life Insurance Pure Life Cover policy
When you purchase your 1Life Pure Life Cover policy, be sure to nominate your home loan provider or bank as the cessionary of the policy. This means that you cede the policy to them, in other words in the event of your death they are the sole beneficiary of your policy should your life cover and your bond amount are the same. Alternatively, if your life cover amount is more than your bond amount, your home loan provider needs to specify what portion of your life cover should be ceded to them, such as R900 000 on a policy with life cover of R1,5 million.
Adjusting the ceded amount as your loan decreases
Your outstanding loan amount will decrease over the years, however the ceded amount of your life cover will not automatically be decreased on your 1Life Insurance policy. Make sure that you amend your policy on an annual basis to decrease the amount that has been ceded to the finance house. In order for you to do this you would need a letter from your home loan provider or bank stating what the outstanding “owing” amount is. Once your bond has been paid up, you will need to get a cession cancellation letter from your home loan provider or bank advising that they no longer have an interest in your life policy. You will have the option to nominate your own beneficiaries, such as a spouse or child.
You can speak to a skilled 1Life Insurance consultant if you have any further queries about taking out and/or ceding a policy.
Published on: 5 December 2012
Updated on: 1 November 2024
