Dear Mr Tan
I will be receiving my HDB flat soon.
I am looking at some of the mortgage protection insurance by various insurance companies. I noticed that the premium is not reducing although the sum assured decreases over the years. What is your opinion?
What advise you will give when buying mortgage protection insurance?
ET
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Dear ET
For the mortgage policy, it is usual to pay a level premium for a decreasing cover. Basically, the insurance company calculate the total cost of insurance for the term (based on the decreasing cover) and work out a level premium that matches the total cost. This type of arrangement is welcomed by the customer.
The premium for a decreasing cover is about 50% of the premium for a similar policy that provides a level cover throughout the term.
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