5
How to Buy & Sell Property
Why is insurance important when
buying property?
PROPERTY loans, unlike many other common
kinds of loans, typically have longer payback
periods. They can be measured in decades,
not months or years. A lot can happen in that
time.
When buying property, it pays to be aware
of this and to plan for the surprises life may
throw up, says certified financial planner
Caren Randall of Randsure Brokers.
When you apply for a home loan, your financing institution will insist on life and
homeowner’s insurance cover as qualifying
criteria. Homeowner’s insurance — also
known as buildings insurance — helps protect
you financially in the case of loss or damage to
the physical structure of your home, including
the permanent fittings like baths, toilets, fitted
cupboards, etc. This insurance also contains
public liability protection to cover you financially in a case where you are found legally
liable for injuries to others or damage to their
property.
Additionally, life insurance is necessary to
cover the repayment of the bond in the case of
the bond payer’s death.
But what happens if you are retrenched, or
fall seriously ill, or are disabled?
When you are paying back a mortgage
bond over a twenty-year period, the odds of
life-changing events such as these interrupting your bond payback plan become more
likely. When that bond is for your home, the
last thing you or your family needs on top of
dealing with a crisis of reduced income, extra
medical costs or caring for a disabled breadwinner, is the double whammy of losing your
home.
What is worth noting here is that while financing institutions insist on life and homeowner’s insurance cover, they may not insist
on the additional comprehensive benefits,
warns Randall.
“Your home or investment property is one
of your biggest assets that you are working
to pay for,” she says. “Therefore, your bond
cover should include comprehensive benefits
of disability, severe illness and retrenchment
cover.”
“It would be in the best interests of your
and your family’s lifestyle protection.”
“However,” Randall points out, “it is important to remember that your home loan approval is not subject to you purchasing a life
policy from the bank offering you the loan.
“According to the FAIS [Financial Advisory
and Intermediary Services] Act of 2004, conditional selling is illegal. Therefore you cannot
be coerced — you are free to seek insurance
advice from your trusted advisor and/or provide proof that you have existing cover.”
Omega Pharmacy
Well Baby Clinic
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• Weight checks
Women’s Health
• Pap smears
• Family planning
• Oral contraceptives
• Injectable contracep-
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Other Services
• Vitamin injections
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Travel Clinic
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• Gems • Discovery • Bonitas • Momentum • Bankmed • Keyhealth • MediHelp • Polmed • Resolution • Sizwe
• Medshield • TigerBrands • Liberty • Fedsure • Nedgroup • Transmed • Medipos • Metropolitan • Netcare
• Wooltru • Pick n Pay • Prime Cure • CareCross • Moto Health
Randall advises that if your existing life
insurance policy already has comprehensive
cover in place, you should speak to your trusted financial advisor instead of purchasing an
additional policy for your bond with your financing institution.
“Your trusted financial advisor knows your
goals and will strategically work with you to
upscale your existing cover, which will ultimately save you money,” she says.
Short-term Insurance Brokers
Specialising in Commercial,
Domestic and Municipal Insurances
604 Chota Motala Road, Raisethorpe, Pietermaritzburg
Tel: 033 387 7701 • Cell: 082 551 1409 • Email: [email protected]
Screening Tests
• Blood pressure
• Blood glucose
• Blood cholesterol
• Anaemia (haemoglo-
bin/iron)
The last thing you or your
family needs in a crisis is
the double whammy of
losing your home too.
50 Hutchinson Road, Pietermaritzburg
Tel: 033 346 2259 • Cell: 084 580 1312
Fax: 033 346 2626
e-mail: [email protected]
We will find you the
most suitable policy to meet
your requirements, both for
your company and
your domestic insurance.
Congratulations Mortgage Choice on your
10th anniversary