Would you take out insurance on a PPOR to cover your wage

[brocky05]

Hello Everyone.

Just a general question here im guessing most people will say yes as I mean its insurance. But im in 2 minds as I want to pay this loan down asap also. I still owe $140,000 on an IP and have just taken out a loan of $380K to build a new PPOR. My problem is the new build wont be finished until November next year and my job is slowly fell less secure as we are loosing some major contracts at work. Do you think it would be worthwhile taking out insurance to cover income loss? Obvious answer is yes I know but can anyone offer advice as to what may happen if I did loose my job and struggled to find work for many many months. Each Property is secured against the other I think so im in deep crap if I default. I guess my other option is loose the IP to fund the new PPOR. What does everyone suggest?

 

[D.T.]

Hence why you don't secure them against each other mate.

 

[brocky05]

I think they are secured against each other but not 100% sure. I know they are not x-colled. Im probably just thinking the worst my job may be safe but I would like to know I could at least finish the build and then sell if worst came to worst.

 

[pinkboy]

Cross collateralised is secured against each other.

pinkboy

 

[Blacky]

Do you think it would be worthwhile taking out insurance to cover income loss?

Income protection insurance covers you if you can't work (due to illness/injury) - not if you are made redundant and can't get another job.

Unless you mean some other kind of insurance which covers you if you can't make your repayment - which I don't know what that would be.
LMI insures the lender - not the borrower. So not protection for you there.

While you still have a job, I would work on getting those properties uncrossed.

Blacky

 

[brocky05]

Hi

They are not crossed I know that for sure. Really so income protection does not cover you if you are out of a job as I have heard a few people talk about it at work that are much older than me and they told me it does cover you but only for maximum 3 or 6 months I think it was....

 

[Jess Peletier]

Most income protection policies don't cover redundancy, but I know ALI has redundancy cover if the job loss happen in the first year if you have their Loan Protection insurance, which is a type of income protection. It's only 3 months cover though while you look for a new job.

It's worth thinking about if you're concerned.