What is bond insurance?

Bond Insurance, also known as Home Loan Life Insurance, Bond Cover and Bond Protection offers the person insured coverage of outstanding obligations for home loans in case of debilitation or death. This type of insurance relieves people of the anxiety about paying for their home loans once they themselves are disabled from doing so.

Main Features

This product has two main features:

1. In case the holder of the insurance plan dies, the plan will pay the outstanding amount of the home loan in an amount equal to the deceased person’s coverage. In case the coverage is more than the outstanding balance of the loan, the remaining excess will be credited to the remaining home loan account. In other words, if your outstanding balance is R30 000.00 and your coverage happens to be R60 000.00, the outstanding amount will be paid and the remaining R30 000.00 used to defray the remaining loan amount.
2. In case the holder of the insurance plan becomes incapacitated for work, thus losing his earning capacity and ability to pay the home loan installments, the insurance will do so for him until he should recover.

This product is designed for the convenience of the client and among its many advantages are:

1. It requires no medical testing.
2. The plan may be modified to accommodate changes in the budget due to the plan holder’s earning capacity as well as increases in the home loan itself.
3. The amount of coverage in excess of the amount needed may be diverted to other financial needs.
4. Ensures that the financial security of the family will not be jeopardized by unpaid home loan amounts.

Home loans and Bond Insurance

Bond Insurance is usually availed of by clients in relation to and in conjunction with their home loans. The amount of the home loan and the coverage of the bond insurance are therefore intricately coordinated and both are streamlined to the client’s ability to earn and to pay so that the companies which offer this kind of coverage can select the best rates for both home loan and insurance coverage for the client.

Words of advice

The above-mentioned are only a few of the benefits you can get from having yourself covered by bond insurance. There are many more details which you can find about the product, if you drop in at websites that offer this kind of protection to its clients. Of course the benefits you will be getting from one outfit may differ from the next. The rule is to go for the company with the best track record.

As in all services offered by lending institutions, the strength of the insurance will depend on the strength of the credit of the institution. So if you are interested in applying for bond insurance, research on the history and track record of the companies you intend to approach for these financial services. Although it does not necessarily follow that the bigger the company, the stronger will their financial standing be, in general it is best to get insurance from people who have been successfully concluding such services for a long time.