How taking out the right life insurance policies can help cover a mortgage

By AAMI 06 September 2021

There is no legal requirement to obtain life insurance when you take out a home loan. However, getting coverage can help to cover mortgage-related costs if you pass away or are unable to work due to illness or injury. In this way, life insurance can help reduce the financial burden faced by your loved ones during a challenging time.

Your mortgage is one of your biggest monthly expenses. Planning how your family would manage financially if you were gone is an important conversation to have.

Life insurance options with AAMI

AAMI Life Insurance provides life cover of up to $1.5 million for death or terminal illness, with up to $10,000 as an advance payment upon your passing. There’s also an option for major illness cover. This can provide financial support if you’re diagnosed with a critical illness such as cancer, stroke or if you suffer a heart attack.

When deciding which type of cover is right for you, consider whether you want your loved ones to be able to entirely pay off the mortgage with the benefit. If so, a lump sum benefit with a life insurance policy may be the most suitable.

Alternatively, income protection insurance can provide an alternative source of income if you’re temporarily unable to work due to injury or illness. AAMI Income Protection Insurance can cover up to 75% of your income over the past 12 months, up to $10,000. This can help you and your family stay on top of bills during your recovery.

When weighing up your options, it’s a good idea to know your budget and work out how much you spend on household bills every month. This can help you understand what type of insurance you need, and how much. This can offer the peace of mind of knowing that your financial obligations are covered.

How life insurance can help with your mortgage repayments

An unexpected illness or injury usually requires time off work to recover. At times, this may extend beyond your accrued compassionate leave days, meaning your income may fall short of what’s needed for your family.

Income Protection Insurance

Income protection insurance can provide a regular stream of income if you are unable to work due to illness or injury. This monthly benefit can help you to meet your mortgage repayments, ensuring that you do not fall behind on your payments.

Life insurance

This provides a lump sum benefit to your loved ones if you are diagnosed with a terminal illness or pass away.

Life Insurance offers flexibility, as it pays a lump sum benefit that can be spent however the beneficiaries choose. This includes, but is not limited to, home loan repayments.

Give you and your family peace of mind with income protection and life insurance policies. Get a quick quote online or call the AAMI Life team on 13 22 44.

AAMI Life Insurance products, other than in some circumstances the Redundancy Benefit, are provided by TAL Life Limited ABN 70 050 109 450 AFSL 237848 (TAL Life) which is part of the TAL Dai-ichi Life Australia Pty Limited ABN 97 150 070 483 group of companies (TAL). TAL companies are not part of the Suncorp Group. TAL companies use the AAMI brand under licence from the Suncorp Group. Redundancy Benefit issued on or before 31st March 2020 was offered by AAI Limited ABN 48 005 297 807 AFSL 230859 (AAI) trading as AAMI which is part of the Suncorp Group. New Redundancy Benefit policies and renewals offered from 1st April 2020 are issued by TAL Life. The different entities of TAL and the Suncorp Group of companies are not responsible for, or liable in respect of, products and services provided by the other.

Any advice on this page in connection with the Life products is general in nature and is provided by Platform Ventures Pty Ltd ABN 35 626 745 177 AFS Representative Number 001266101 (PV). PV is part of the Suncorp Group and an authorised representative of TAL Direct Pty Limited ABN 39 084 666 017 AFSL 243260 (TAL Direct). General advice does not take into account your individual needs, objectives or financial situation. Before you decide to buy or to continue to hold a Life Product you must read the relevant Product Disclosure Statement. The Target Market Determination (TMD) for the product is also available.

TAL Life supports and adheres to the Life Insurance Code of Practice (Code). The Code has been developed voluntarily by the Life Insurance industry through the Financial Services Council to promote high standards of service to consumers, provide a benchmark of consistency within the industry, and establish a framework for professional behaviour and responsibilities.