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Do You Need Life Insurance for A Mortgage in Australia

Fact Checked

Updated: 19 May 2024

While having some cover in your superannuation is a great start, it might not be enough if something were to happen to you.

What would happen if you were to become sick or disabled or died? Term life insurance could pay off your entire mortgage should you pass away before it’s been repaid, helping your family to continue living in their home if the worst were to happen.

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Can I get a mortgage without life insurance?

Yes, life insurance for a mortgage is generally not compulsory. However, your home is probably one of your most important financial assets and should be protected. If you rely on your income to pay your home loan and are unable to work because of a disability or disease, you might lose your house. Or, if you die, your loved ones might not have a home.

Is life insurance necessary for a mortgage?

While life insurance might not be necessary when buying property, you and your family might still need it. Consider the risk to you and your family’s financial future. Although life cover might not be mandatory, Lender Mortgage Insurance (LMI) cover is usually compulsory when buying a house with less than 20% deposit. LMI protects the lender, usually your bank, and not you, the borrower.

Is mortgage protection the same as life insurance?

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How can life insurance protect your mortgage?

Life cover pays a lump sum benefit to your nominated beneficiaries in the event of your death or diagnosis of a terminal illness. Your loved ones can then use this money to cover the outstanding mortgage and other debts, so they may continue to live in the house you bought.

How much life insurance do you need when buying a house?