Essential Home Loan Insurance

Home Loan Tips

Home and Bond insurance is a vital part of your home loan investment, but few home owners are aware of their options or the different kind of bond insurance policies available in South Africa.

Let’s explore the types of home loan and life assurance policies being offered by the four largest home loans providers in South Africa.

Life Assurance / Mortgage Insurance

Before you are granted a home loan, many banks and specialist mortgage provides may request that you cede a life assurance policy to the lender. This policy covers the outstanding balance on the home loan at anytime. Mortgage Insurance protects the bank and your family as it settles the balance owing on the loan if the borrower dies or is permanently disabled.

Willie Lategan, MD of Absa Life says, “Failing to take out such life cover can have disastrous consequences. There have been cases where the families of borrowers who died without this cover had to evacuate their houses and find alternative accommodation, because they could not afford the repayments on the bond.”

Your Options:
FNB – Home Loan Protection Suite: The FNB Home Loan Protection Suite of products is designed to ensure that you can meet your HomeLoan repayments, in the event of the unforeseen occurring.
ABSA – Absa’s Life assurance is designed to provide you with peace of mind knowing that your family’s and your own security is protected against unexpected life events.
STANDARD BANK – The Home Loan Protection Plan is designed for new and existing Standard Bank homeowners who have an outstanding bond balance of up to R500 000. It is a creditor insurance product underwritten by Liberty Active and administered by Standard Bank Insurance Brokers. The Home Loan Protection Plan is flexible allowing you to choose your own cover.
NEDBANK – You may be required to take out Loan Protection Assurance (LPA) when you register a homeloan with Nedbank. Any proceeds payable in the event of a claim will first be applied to your homeloan account.
This policy covers you as a bondholder. The option is also available to all trustees and all members of close corporations.

Building Insurance / Home-owners Cover

Home-owners cover is an essential requirement for anyone who wishes to own a home, and no bank or mortgage lender will ever grant you a bond without insisting on Homeowner insurance.

Whereas, Mortgage Insurance covers your outstanding bond amount, Building Insurance insures your house and any structural improvements to the property.

It protects the banks interests as well as your own, and while it covers fire, storm and other damages, building insurance won’t cover general repairs.

Your Options:
FNB – Homeowners Cover is provided by OUTsurance
ABSA – Home Owner’s Comprehensive Insurance (HOC) : HOC is short-term insurance cover that protects your home – a very valuable asset – against fire, flooding and other disasters. This insurance covers the replacement value of the structure and fixtures of your home. Household content such as TVs or furniture is not covered and would need to be specified under separate Household Insurance.
STANDARD BANK – A homeowner’s comprehensive insurance policy is compulsory if you have a home loan. The rates charged include South African Special Risks Insurance (Sasria) and limited subsidence and landslip cover.
Insurance cover is automatically arranged by us when your bond is registered. The property is fully insured for the duration of your bond agreement as laid down in the Insurance and Usury Acts with an insurer chosen by us.
NEDBANK – Insure your home with us for guaranteed peace of mind – and no hidden surprises. Our policies don’t hide or downplay anything, or take refuge in fine print.
Our Houseowners Comprehensive Cover provides better cover than that offered by most similar policies. The basis of the cover is “all risks”, and our policyholders also enjoy additional cover.