What if? I get made Redundant

Hi all,
I was wondering what section to submit my post to and I thought Finance since it is kindof related! I lose my job in the next few years my IP investments might take a hit.

I was wondering if anyone knows of a good insurance company that provideds income protection insurance if you get made redundant.

Which company has the best?

Best Regards


P.s I'm in IT so this is very important!!
Hi Marc

Im not in the insurance business. I feel that such a risk is undefinable and therefore not truly insurable. There may be a policy that covers a short period but I have yet to hear of something like that.

The best insurance I feel is to borrow/save in advance for times
when you may need it- leading to one of my favourite discussions that of the Mortgage Insurance - foolish waste of cash or shrewd risk management ?


Dear Marc,

Rolf is right. It is impossible to insure for everything -remember Insurance companies would only provide a product if they were making a profit on it and will find every possible reason not to pay.

I believe in self insurance so that you have some in reserve when you need it. Believe me I speak from experience ----- Insurance companies don't pay when you need them. This was based on a policy that I was forking out $12,000/year for.


Hi Rolf,
Mortgage Insurance you say? Not Lenders Mortgage Insurance I would think? Please go on I am very interested in your subject!

Hi Marc

Early on in your investing career, if you are flush with cash you have this interesting choice, do I stick in a 20 % deposit or, do I go for a 5 or 10 % deposit and pay a Lenders Mortgage Premium of up to 2.2 %.

Marc 1 says bugger the LMI, ill tip in my spare cash so that my repayments are lower and therefore the risk of me having a problem is lower.

Marc 2 says Ill pay the premium and borrow 95 % of the purchase price and squirrel the rest away for a challenge or an opportunity ?

I will put it to you that Marc 1 is taking a much bigger risk than Marc 2, at what is "in reality" a minimal cost.

A typical risk management strategy in this quite typical scenario goes like this, assuming that Marc2 does not have a PPOR debt.

Go for 95 % lend. Use say ANZ who will alos lend you the Mortgage Insurance.

Take the 15 % that is left over and plonk it into an offset acct, thereby your interest cost is "almost" the same as with the 80 % lend.

The increased running costs of the above structure varies according to the amount borrowed and the borrowers tax position and some other variables. In most cases it adds around $ 100 per year per 100 000 k borrowed after typical tax benefits.

Some would argue that hey I can alwasy refinance to get myself out of the pooh if and when it happens. Lenders and Mortgage Insurers are funny buggers. They wont give you a loan when you have been retrenched and you cant find work.

Comments ?



I have a different viewpoint on mortgage insurance as I never like to pay for what I don't have to. Level of comfortable risk is another.

However I do agree to alway borrow money/establish credit facilities when you DON'T need it.

Establishing credit always takes time and can mean the difference of lost opportunities or buying time to get you out of trouble later.


Thank you very much for that post. I was considering going the 80% route myself, but since reading your post, you have made it very difficult to justify putting so much money into a deal. I will definitely be going the 95% lend way, for sure.
I guess though, it comes down to risk tolerance in the end - some people are just flat out going to put in 80% anyway, no matter what you tell 'em. Would that sound correct to you?

'no hat, some cattle'
Some people may not get approval on a loan if they want 95% LVR given the repayments are higher?

Some people may not have the self-control to restrain themselves from "dipping into" the extra 15% sitting in an offset account, whereas once it's parked in a loan it's harder to get at.

But if you can restrain yourself I think parking the 15% extra in an offset account is the better approach.

By this logic, all P&I loans are crap if you can get an interest only loan with offset at the same interest rate, because it gives you more flexibility when things go south, yes?

(I'm not just talking about IP loans here).

A small split on your loan which is P&I is a good emotional thing to have, say 50 k on 300 or so.

On many high lend loans the LMI people will not give you I/o either for owner occupier, and that is wher you may come unstuck.

Almost anything is possible but its also very important to realise there is nor cure-all. Your mortgage adviser/broker needs to be skilled in trying to work out where you want to go and what risks you can emotionally carry along the way.



I recon the theme song from the movie "The Italian Job" job says it all...

with words like...

"...its a self preservation society..." :)

Though their methods shouldnt be practiced :)

Thats what we as a group of investors are "A self preservation society"

Michael G

btw good news - I read in the paper the other day that "The Italian Job is being remade next year", still one of the best car chase movies!